Chitosan is a promising naturally derived polysaccharide to be used in hydrogel forms for pharmaceutical and biomedical applications. The multifunctional chitosan-based hydrogels have attractive properties such as the ability to encapsulate, carry, and release the drug, biocompatibility, biodegradability, and non-immunogenicity. In this review, the advanced functions of the chitosan-based hydrogels are summarized, with emphasis on fabrications and resultant properties reported in literature from the recent decade. The recent progress in the applications of drug delivery, tissue engineering, disease treatments, and biosensors are reviewed. Current challenges and future development direction of the chitosan-based hydrogels for pharmaceutical and biomedical applications are prospected.