Chitosan, a biopolymer obtained from chitin through deacetylation, is acknowledged as a cornerstone in advanced drug delivery research due to its biocompatibility, biodegradability, and natural mucoadhesive properties. This minireview consolidates recent advances in modification techniques, including quaternization, hydrophobic grafting, and thiolation, as well as their incorporation into nanoparticles, hydrogels, films, and nano emulsions. We analyse essential fabrication techniques (ionic gelation, emulsification, nanoprecipitation, and reverse micellization) and detail how these methods tailor particle size, surface charge, and release kinetics to achieve optimal therapeutic effectiveness. Special attention is directed towards the transdermal and topical management of atopic dermatitis, highlighting the effectiveness of hydrophobic ally and thiol-modified chitosan nanocarriers. These carriers have demonstrated enhanced skin adhesion, pH-responsive drug release, and significant reductions in lesion severity and cytokine expression in preclinical studies. Finally, we examine emerging trends in chitosan-based composites and nano-formulations, highlighting opportunities for multifunctional delivery systems, targeted therapies, and scalable manufacturing aimed at clinical translation.