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Chitosan is a biodegradable and biocompatible natural polymer that has been extensively explored in recent decades. The Food and Drug Administration has approved chitosan for wound treatment and nutritional use. Furthermore, chitosan has paved the way for advancements in different biomedical applications including as a nanocarrier and tissue-engineering scaffold. Its antibacterial, antioxidant, and haemostatic properties make it an excellent option for wound dressings. Because of its hydrophilic nature, chitosan is an ideal starting material for biocompatible and biodegradable hydrogels. To suit specific application demands, chitosan can be combined with fillers, such as hydroxyapatite, to modify the mechanical characteristics of pH-sensitive hydrogels. Furthermore, the cationic characteristics of chitosan have made it a popular choice for gene delivery and cancer therapy. Thus, the use of chitosan nanoparticles in developing novel drug delivery systems has received special attention. This review aims to provide an overview of chitosan-based nanoparticles, focusing on their versatile properties and different applications in biomedical sciences and engineering.