Chitosan (CS) is a natural polymer derived from chitin that has found its usage both in research and commercial applications due to its unique solubility and chemical and biological attributes. The biocompatibility and biodegradability of CS have helped researchers identify its utility in the delivery of therapeutic agents, tissue engineering, wound healing, and more. Industrial applications include cosmetic and personal care products, wastewater treatment, and corrosion protection, to name a few. Many researchers have published numerous reviews outlining the physical and chemical properties of CS, as well as its use for many of the above-mentioned applications. Recently, the cationic polyelectrolyte nature of CS was found to be advantageous for stabilizing fascinating photonic materials including plasmonic nanoparticles (e.g., gold and silver), semiconductor nanoparticles (e.g., zinc oxide, cadmium sulfide), fluorescent organic dyes (e.g., fluorescein isothiocyanate (FITC)), luminescent transitional and lanthanide complexes (e.g., Au(I) and Ru(II), and Eu(III)). These photonic systems have been extensively investigated for their usage in antimicrobial, wound healing, diagnostics, sensing, and imaging applications. Highlighted in this review are the different works involving some of the above-mentioned molecular-nano systems that are prepared or stabilized using the CS polymer. The advantages and the role of the CS for synthesizing and stabilizing the above-mentioned optically active materials have been illustrated.