Chitosan is one of the emerging materials for various applications. The most intensive studies have focused on its use as a biomaterial and for biomedical, cosmetic, and packaging systems. The research on biodegradable food packaging systems over conventional non-biodegradable packaging systems has gained much importance in the last decade. The deacetylation of chitin, a polysaccharide mainly obtained from crustaceans and shrimp shells, yields chitosan. The deacetylation process of chitin leads to the generation of primary amino groups. The functional activity of chitosan is generally owed to this amino group, which imparts inherent antioxidant and antimicrobial activity to the chitosan. Further, since chitosan is a naturally derived polymer, it is biodegradable and safe for human consumption. Food-focused researchers are exploiting the properties of chitosan to develop biodegradable food packaging systems. However, the properties of packaging systems using chitosan can be improved by adding different additives or blending chitosan with other polymers. In this review, we report on the different properties of chitosan that make it suitable for food packaging applications, various methods to develop chitosan-based packaging films, and finally, the applications of chitosan in developing multifunctional food packaging materials. Here we present a short overview of the chitosan-based nanocomposites, beginning with principal properties, selected preparation techniques, and finally, selected current research.