Oral mucositis is a frequent and potentially severe complication of radiation or chemotherapy for cancer. Associated with atrophy and ulceration of the oral mucosa is an increased risk of infection, and the most common pathogenic agent is Candida. Chitosan is an excellent candidate for the treatment of oral mucositis. Its bioadhesive and antimicrobial properties offer the palliative effects of an occlusive dressing and the potential for delivering drugs, including anti-candidal agents. The aim of this study was to develop an occlusive bioadhesive system for prophylaxis and/or treatment of oral mucositis. Gel and film formulations were prepared using chitosans at different molecular weights and in different solvents. Nystatin, which is considered as a prophylactic agent for oral mucositis was incorporated into the formulations. The in vitro release of nystatin from the formulations was decreased with the increasing molecular weight of chitosan. The effect of the formulations was investigated in vivo in hamsters with chemotherapy-induced mucositis. Mucositis scores in groups treated with nystatin incorporated into gel and suspension formulations were significantly lower (p < 0.05) than those treated with the chitosan gel alone. Survival of animals in the treated groups was higher than that in the control group. The retention time and distribution of the gels in the oral cavity were investigated in healthy volunteers. A faster distribution of nystatin in the oral cavity was obtained using the suspension compared to the gels, but the nystatin saliva level decreased rapidly as well. A drug concentration above the minimum inhibitory concentration (MIC) value for Candida albicans (0.14 microg/ml) was maintained for longer periods of time at the application site (90 min) than at the contralateral site (45 min) in the oral cavity.