As the second abundant biomass in nature, chitin widely exists in crustaceans, insects, plankton, fungi and so on. Thus, extracting chitin from crustaceans’ seafood waste and applying it and its derivatives in biomedicine represents the idea of turning waste into treasure. However, the poor solubility severely limits the application range and field of chitin. Thus, the chemical modification of chitin has always been a hot field in the research of such compounds, endowing chitin better solubility, pH-sensitive targeting, and drug delivery functions. In this review, the modification methods of chitin were summarized to improve the water solubility, pH sensitivity and targeting of chitin derivatives. At the same time, the application of chitin derivatives in many fields such as antibacterial, sustained release, targeting and drug delivery are introduced. This review offers a good reference for sustainable development.