Plasticized chitosan with hierarchical structure, including multiple length scale structural units, was prepared by a "melt"-based method, that is, thermomechanical mixing, as opposed to the usual casting-evaporation procedure. Chitosan was successfully plasticized by thermomechanical mixing in the presence of concentrated lactic acid and glycerol using a batch mixer. Different plasticization formulations were compared in this study, in which concentrated lactic acid was used as protonation agent as well as plasticizer. The microstructure of thermomechanically plasticized chitosan was investigated by X-ray diffraction, scanning electron microscopy, and optical microscopy. With increasing amount of additional plasticizers (glycerol or water), the crystallinity of the plasticized chitosan decreased from 63.7% for the original chitosan powder to almost zero for the sample plasticized with additional water. Salt linkage between lactic acid molecules and amino side chains of chitosan was confirmed by FTIR spectroscopy: the lactic acid molecules expanded the space between the chitosan molecules of the crystalline phase. In the presence of other plasticizers (glycerol and water), various levels of structural units including an amorphous phase, nanofibrils, nanofibril clusters, and microfibers were produced under mechanical shear and thermal energy and identified for the first time. The thermal and thermomechanical properties of the plasticized chitosan were measured by thermogravimetric analysis, differential scanning calorimetric, and DMA. These properties were correlated with the different levels of microstructure, including multiple structural units.