This comprehensive review illuminates the various methods of chitosan extraction, its antibacterial properties, and its multifarious applications in diverse sectors. We delve into chemical, physical, biological, hybrid, and green extraction techniques, each of which presents unique advantages and disadvantages. The choice of method is dictated by multiple variables, including the desired properties of chitosan, resource availability, cost, and environmental footprint. We explore the intricate relationship between chitosan's antibacterial activity and its properties, such as cationic density, molecular weight, water solubility, and pH. Furthermore, we spotlight the burgeoning applications of chitosan-based materials like films, nanoparticles, nonwoven materials, and hydrogels across the food, biomedical, and agricultural sectors. The review concludes by highlighting the promising future of chitosan, underpinned by technological advancements and growing sustainability consciousness. However, the critical challenges of optimizing chitosan's production for sustainability and efficiency remain to be tackled.