Chitosan, a natural polysaccharide, is being widely used as a pharmaceutical excipient. It is obtained by the partial deacetylation of chitin, the second most abundant natural polymer. Chitosan comprises a series of polymers varying in their degree of deacetylation, molecular weight, viscosity, pKa etc. The presence of a number of amino groups permit chitosan to chemically react with anionic systems, thereby resulting in alteration of physicochemical characteristics of such combinations. Chitosan has found wide applicability in conventional pharmaceutical devices as a potential formulation excipient, some of which include binding, disintegrating and tablet coating properties. The polymer has also been investigated as a potential adjuvant for swellable controlled drug delivery systems. Use of chitosan in novel drug delivery as mucoadhesive, gene and peptide drug administration via the oral route as well as its absorption enhancing effects have been explored by a number of researchers. Chitosan exhibits myriad biological actions, namely hypocholesterolemic, antimicrobial and wound healing properties. Low toxicity coupled with wide applicability makes it a promising candidate not only for the purpose of drug delivery for a host of drug moieties (antiinflammatories, peptides etc.) but also as a biologically active agent. It is the endeavour of the present review to provide an insight into the biological and pharmaceutical profile of chitosan. Various investigations carried out recently are reported, although references to research performed on chitosan prior to the recent reviews have also been included, where appropriate.