Chitooligosaccharide (COS), which is acknowledged for possessing multiple functions, is a kind of low-molecular-weight polymer prepared by degrading chitosan via enzymatic, chemical methods, etc. COS has comprehensive applications in various fields including food, agriculture, pharmacy, clinical therapy, and environmental industries. Besides having excellent properties such as biodegradability, biocompatibility, adsorptive abilities and non-toxicity like chitin and chitosan, COS has better solubility. In addition, COS has strong biological functions including anti-inflammatory, antitumor, immunomodulatory, neuroprotective effects, etc. The present paper has summarized the preparation methods, analytical techniques and biological functions to provide an overall understanding of the application of COS.