Chitosan, derived from chitin—the second most abundant natural biopolymer after cellulose—stands out as a sustainable and multifunctional material with wide-ranging industrial and biomedical applications. Characterized by biodegradability, biocompatibility, and non-toxicity, chitosan serves as an eco-friendly alternative to synthetic polymers. Its precursor, chitin, is mainly obtained from crustacean shells and fungal cell walls, consisting of N-acetyl glucosamine monomers arranged in α, β, and γ polymorphic forms. Through deacetylation, chitin is converted into chitosan, a β-(1,4)-linked D-glucosamine polymer with improved solubility and reactivity. This transformation enhances its usability in fields such as drug delivery, agriculture, wound healing, and water purification. Chemical modifications—such as N-substitution for antimicrobial properties, O-substitution for solubility enhancement, crosslinking for hydrogel formation, and grafting for improved adsorption—further expand its potential. To optimize such modifications, precise characterization is achieved through vibrational spectroscopy techniques, including infrared (IR) and Raman spectroscopy, which provide insights into structural and chemical features. Owing to its exceptional tunability, chitosan is increasingly recognized as a transformative biopolymer suited for biomedical, environmental, and food applications. Continued research combining chemical modification and spectroscopic analysis can further optimize chitosan’s structure–function relationships, establishing it as a cornerstone in sustainable material science and biotechnological innovation.