Chitin is the second most important natural polymer in the world. The main sources exploited are two marine crustaceans, shrimp and crabs. Our objective is to appraise the state of the art concerning this polysaccharide: its morphology in the native solid state, methods of identification and characterization and chemical modifications, as well as the difficulties in utilizing and processing it for selected applications. We note the important work of P. Austin, S. Tokura and S. Hirano, who have contributed to the applications development of chitin, especially in fiber form. Then, we discuss chitosan, the most important derivative of chitin, outlining the best techniques to characterize it and the main problems encountered in its utilization. Chitosan, which is soluble in acidic aqueous media, is used in many applications (food, cosmetics, biomedical and pharmaceutical applications). We briefly describe the chemical modifications of chitosan—an area in which a variety of syntheses have been proposed tentatively, but are not yet developed on an industrial scale. This review emphasizes recent papers on the high value-added applications of these materials in medicine and cosmetics.