The natural biopolymer chitin and its deacetylated product chitosan are found abundantly in nature as structural building blocks and are used in all sectors of human activities like materials science, nutrition, health care, and energy. Far from being fully recognized, these polymers are able to open opportunities for completely novel applications due to their exceptional properties which an economic value is intrinsically entrapped. On a commercial scale, chitosan is mainly obtained from crustacean shells rather than from the fungal and insect sources. Significant efforts have been devoted to commercialize chitosan extracted from fungal and insect sources to completely replace crustacean-derived chitosan. However, the traditional chitin extraction processes are laden with many disadvantages. The present review discusses the potential bioextraction of chitosan from fungal, insect, and crustacean as well as its superior physico-chemical properties. The different aspects of fungal, insects, and crustacean chitosan extraction methods and various parameters having an effect on the yield of chitin and chitosan are discussed in detail. In addition, this review also deals with essential attributes of chitosan for high value-added applications in different fields and highlighted new perspectives on the production of chitin and deacetylated chitosan from different sources with the concomitant reduction of the environmental impact.