The nanoparticle-based advanced drug formulations present indubitable benefits for drug administration. Over the past two decades, new approaches for the development of novel drug delivery carriers have yielded the opportunities to address and treat many disease conditions. Among the other drug delivery systems, chitosan has recently gained more attention for the development of safe and effective drug delivery systems due to its biocompatibility and unique physicochemical characteristics. Chitosan is a cationic, biodegradable, and biocompatible polymer, which appears to be safe for human dietary use and approved for wound dressing applications. Chitosan has reached a prominent position as a carrier-forming material for the development of polymeric nanoparticles for drug delivery through various routes of administration. Chitosan-based nanoparticles have numerous applications for the treatment of different disease conditions. This chapter mainly explains the characteristics of chitosan, different methods of chitosan nanoparticle preparation, and their applications in drug delivery, hemostasis and stem cell research.