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Chitosan has emerged as a biodegradable, nontoxic polymer with multiple beneficial applications in the agricultural and biomedical sectors. As nanotechnology has evolved as a promising field, researchers have incorporated chitosan-based nanomaterials in a variety of products to enhance their efficacy and biocompatibility. Moreover, due to its inherent antimicrobial and chelating properties, and the availability of modifiable functional groups, chitosan nanoparticles were also directly used in a variety of applications. In this review, the use of chitosan-based nanomaterials in agricultural and biomedical fields related to the management of abiotic stress in plants, water availability for crops, controlling foodborne pathogens, and cancer photothermal therapy is discussed, with some insights into the possible mechanisms of action. Additionally, the toxicity arising from the accumulation of these nanomaterials in biological systems and future research avenues that had gained limited attention from the scientific community are discussed here. Overall, chitosan-based nanomaterials show promising characteristics for sustainable agricultural practices and effective healthcare in an eco-friendly manner.