Recebido em 27/1/09; aceito em 13/3/09; publicado na web em 2/4/09 CHITOSAN: FUNCTIONAL BYOPOLYMER WITH BIOMEDICAL INDUSTRIAL POTENTIAL. The importance of chitosan has grown significantly over the last two decades due to its renewable and biodegradable source, and also because of the recent increase in the knowledge of its functionality in the technological and biomedical applications. The present article reviews the biopolymer chitosan and its derivatives as versatile biomaterials for potential drug delivery systems, as well as tissue engineering applications, analgesia and treatment of arthritis.