Chitosan (CS), a versatile biopolymer obtained through the deacetylation of chitin, has gained significant interest in biomedical and pharmaceutical applications due to its biocompatibility, biodegradability, and unique gel-forming capabilities. This review comprehensively analyzes CS-based gel development, covering its extraction from various natural sources, gelation mechanisms, and biomedical applications. Different extraction methods, including chemical, biological, and green techniques, are discussed regarding efficiency and sustainability. The review explores the physicochemical properties of CS that influence its gelation behavior, highlighting various gelation mechanisms such as physical, ionic, and chemical cross-linking. Recent advances in gel formation, including Schiff base reactions, Diels-Alder click chemistry, and thermosensitive gelation, have expanded the applicability of CS hydrogels. Furthermore, CS-based gels have demonstrated potential in wound healing, tissue engineering, drug delivery, and antimicrobial applications, offering controlled drug release, enhanced biocompatibility, and tunable mechanical properties. The incorporation of nanomaterials, bioactive molecules, and functional cross-linkers has further improved hydrogel performance. The current review underscores the growing significance of CS-based gels as innovative biomaterials in regenerative medicine and pharmaceutical sciences.