A considerable amount of work has been published on chitosan and its potential use in drug delivery systems. Chitosan has a cationic character because of its primary amino groups. These primary amino groups are responsible for properties such as controlled drug release, mucoadhesion, in situ gellation, transfection, permeation enhancement and efflux pump inhibitory properties. Due to chemical modifications, most of these properties can even be further improved. Chitosan Hydrogel has been recently developed serve as semi synthetic or synthetic extra cellular matrix to provide an amenable environment for cellular adherence and cellular remodeling in three dimensional structures mimicking that of natural cellular environment. Additionally, hydrogels have the capacity to carry small molecule drugs and/or proteins, growth factors and other necessary components for cell growth and differentiation. In the context of drug delivery, hydrogels can be utilized to localize drugs, increase drugs concentration at the site of action and consequently reduce off-targeted side effects. This review classifies hydrogels and their method of preparation.