Chitosan is one of the most studied natural origin polymers for biomedical applications. This review focuses on the potential of chitosan in localized antimicrobial therapy to address the challenges of current rising antimicrobial resistance. Due to its mucoadhesiveness, chitosan offers the opportunity to prolong the formulation residence time at mucosal sites; its wound healing properties open possibilities to utilize chitosan as wound dressings with multitargeted activities and more. We provide an unbiased overview of the state-of-the-art chitosan-based delivery systems categorized by the administration site, addressing the site-related challenges and evaluating the representative formulations. Specifically, we offer an in-depth analysis of the current challenges of the chitosan-based novel delivery systems for skin and vaginal infections, including its formulations optimizations and limitations. A brief overview of chitosan’s potential in treating ocular, buccal and dental, and nasal infections is included. We close the review with remarks on toxicity issues and remaining challenges and perspectives.