One of the ultimate goals of wound healing research is to find effective healing techniques that utilize the regeneration of similar tissues. This involves the modification of various wound dressing biomaterials for proper wound management. The biopolymer chitosan (beta-1,4-D-glucosamine) has natural biocompatibility and biodegradability that render it suitable for wound management. By definition, a biocompatible biomaterial does not have toxic or injurious effects on biological systems. Chemical and physical modifications of chitosan influence its biocompatibility and biodegradability to an uncertain degree. Hence, the modified biomedical-grade of chitosan derivatives should be pre-examined in vitro in order to produce high-quality, biocompatible dressings. In vitro toxicity examinations are more favorable than those performed in vivo, as the results are more reproducible and predictive. In this paper, basic in vitro tools were used to evaluate cellular and molecular responses with regard to the biocompatibility of biomedical-grade chitosan. Three paramount experimental parameters of biocompatibility in vitro namely cytocompatibility, genotoxicity and skin pro-inflammatory cytokine expression, were generally reviewed for biomedical-grade chitosan as wound dressing.