Over the past decade, smart and functional biomaterials have escalated as one of the most rapidly emerging fields in the life sciences because the performance of biomaterials could be improved by careful consideration of their interaction and response with the living systems. Thus, chitosan could play a crucial role in this frontier field because it possesses many beneficial properties, especially in the biomedical field such as excellent biodegradability, hemostatic properties, antibacterial activity, antioxidant properties, biocompatibility, and low toxicity. Furthermore, chitosan is a smart and versatile biopolymer due to its polycationic nature with reactive functional groups that allow the polymer to form many interesting structures or to be modified in various ways to suit the targeted applications. In this review, we provide an up-to-date development of the versatile structures of chitosan-based smart biomaterials such as nanoparticles, hydrogels, nanofibers, and films, as well as their application in the biomedical field. This review also highlights several strategies to enhance biomaterial performance for fast growing fields in biomedical applications such as drug delivery systems, bone scaffolds, wound healing, and dentistry.