Chitin is a natural compound that is the second most abundant biological compound in nature. Chitin is found in many fungi species and aquatic crustaceans like crabs, shrimps, and many insects. Shrimp is the source of one of the most rapidly increasing businesses in the world. However, during shrimp processing, the hard exoskeleton of shrimps, like shrimp skin and head portions, is discarded as bio-waste. This exoskeleton of shrimp contains a considerable amount of chitin. Chitosan is a bio-product that is produced from chitin by the deacetylation process. Either chemical or biological processes can carry out the deacetylation process. The massive number of chitin treated as bio-waste can be used to produce chitosan. Chitosan is a biocompatible compound, naturally biodegradable, and non-toxic, and this compound can be used in various applications. Chitosan has potential antimicrobial and antioxidant activities. Moreover, it can also be used in drug delivery, biotechnology, bio-nanotechnology, food technology, regenerative medicine, medicine, numerous industrial applications, gene therapy, cancer therapy, agriculture, environmental protection, and so on. This review summarizes the methods of chitosan production as well as its various potential applications.