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Chitosan is a versatile natural polymer. This article reviewed different aspects of Chitosan that’s including preparation and characterization of Chitosan with their applicability in pharmaceutical formulations. Also, the article included different derivatives of Chitosan and their use in different drug delivery system. This review emphasized that research on Chitosan based systems containing various drugs for various therapeutic applications have increased in recent years. So this article has fullfill the requirement of a review on this naturally derived polymer in present scenario.