The prospective applications of chitosan-based hydrogels (CBHs), a category of biocompatible and biodegradable materials, in biomedical disciplines such as tissue engineering, wound healing, drug delivery, and biosensing have garnered great interest. The synthesis and characterization processes used to create CBHs play a significant role in determining their characteristics and effectiveness. The processing procedure could be tailored to obtain specific features like porosity, swelling, mechanical strength, degradation rate, and bioactivity, affecting the properties of CBHs to a great extent. Additionally, characterization methods aid in gaining access to the microstructures and properties of CBHs. Especially, this review provides a comprehensive assessment of the state-of-the-art with a focus on the affiliation between particular properties and application domains. The main obstacles and prospects for the future of CBH development for biomedical applications are also covered in the review.