Chitin deacetylase (CDA) (EC 3.5.1.41) is a hydrolytic enzyme that belongs to carbohydrate esterase family 4 as per the CAZY database. The CDA enzyme deacetylates chitin into chitosan. As the marine ecosystem is a rich source of chitin, it would also hold the unexplored extremophiles. In this study, an organism was isolated from 40 m sea sediment under halophilic condition and identified as Bacillus aryabhattai B8W22 by 16S rRNA sequencing. The CDA gene from the isolate was cloned and overexpressed in E. coli Rosetta pLysS and purified using a Ni–NTA affinity chromatography. The enzyme was found active on both ethylene glycol chitin (EGC) and chitooligosaccharides (COS). The enzyme characterization study revealed, maximum enzyme velocity at one hour, optimum pH at 7 with 50 mM Tris–HCl buffer, optimum reaction temperature of 30 ºC in standard assay conditions. The co-factor screening affirmed enhancement in the enzyme activity by 142.43 ± 7.13% and 146.88 ± 4.09% with substrate EGC and COS, respectively, in the presence of 2 mM Mg2+. This activity was decreased with the inclusion of EDTA and acetate in the assay solutions. The enzyme was found to be halotolerant; the relative activity increased to 116.98 ± 3.87% and 118.70 ± 0.98% with EGC and COS as substrates in the presence of 1 M NaCl. The enzyme also demonstrated thermo-stability, retaining 87.27 ± 2.85% and 94.08 ± 0.92% activity with substrate EGC and COS, respectively, upon treatment at 50 ºC for 24 h. The kinetic parameters Km, Vmax, and Kcat were 3.06E−05 µg mL−1, 3.06E + 01 µM mg−1 min−1 and 3.27E + 04 s−1, respectively, with EGC as the substrate and 7.14E−07 µg mL−1, 7.14E + 01 µM mg−1 min−1 and 1.40E + 06 s−1, respectively, with COS as the substrate. The enzyme was found to be following Michaelis–Menten kinetics with both the polymeric and oligomeric substrates. In recent years, enzymatic conversion of chitosan is gaining importance due to its known pattern of deacetylation and reproducibility. Thus, this BaCDA extremozyme could be used for industrial production of chitosan polymer as well as chitosan oligosaccharides for biomedical application.