Chitosan has gained considerable recognition within the field of medical applications due to its exceptional biocompatibility and diverse range of properties. Nevertheless, prior reviews have primarily focused on its applications, offering limited insights into its source materials. Hence, there arises a compelling need for a comprehensive review that encompasses the entire chitin and chitosan life cycle: from the source of chitin and chitosan, extraction methods, and specific medical applications, to the various techniques employed in evaluating chitosan’s properties. This all-encompassing review delves into the critical aspects of chitin and chitosan extraction, with a strong emphasis on the utilization of natural raw materials. It elucidates the various sources of these raw materials, highlighting their abundance and accessibility. Furthermore, a meticulous examination of extraction methods reveals the prevalent use of hydrochloric acid (HCl) in the demineralization process, alongside citric, formic, and phosphoric acids. Based on current review information, these acids constitute a substantial 69.2% of utilization, surpassing other mentioned acids. Of notable importance, the review underscores the essential parameters for medical-grade chitosan. It advocates for a degree of deacetylation (DDA) falling within the range of 85%–95%, minimal protein content <1%, ash content <2%, and moisture content <10%. In conclusion, these crucial factors contribute to the understanding of Chitosan’s production for medical applications, paving the way for advancements in biomedical research and development.