The antifungal activity of chitosan against Fusarium spp. was investigated based on in vitro and in vivo assays, and its possible modes of action were also explored. Chitosan applied at 4.0 g/L of acetic acid‐distilled water solution significantly decreased the mycelial growth of Fusarium oxysporum, Fusarium sambucinum and Fusarium graminearum by 88.4%, 89.0% and 89.8%, respectively. Tuber treatment by chitosan (4.0 g/L) of acetic acid‐distilled water solution, prior to inoculation, reduced dry rot severity induced by F. oxysporum and F. sambucinum by 60.0% and 48.2%, respectively. When tested as plant treatment, potato plants inoculated with Fusarium species, exhibited 33.5%–45.3% less wilting severity as compared to the control. This abiotic treatment improved the phenolic compounds activities and defence‐related enzymes such as peroxidase and polyphenoloxidase in potato tubers inoculated with Fusarium spp. Results clearly demonstrated that chitosan could be explored as an alternative agent to chemical fungicides for the control of tuber dry rot and Fusarium wilt through induction of the plant defence system.