Chitosan (CS) has received much attention as a functional biopolymer for designing various hydrogels for biomedical applications. This review provides an overview of the different types of CS-based hydrogels, the approaches that can be used to fabricate hydrogel matrices with specific features and their applications in controlled drug delivery and tissue engineering. Emphasis is laid on the recent design concepts of hybrid hydrogels based on mixtures of CS and natural or synthetic polymers, interpenetrating polymer networks as well as composite hydrogels prepared by embedding nanoparticles into CS matrices.