Chitosan (aminopolysaccharide) exhibiting excellent functional properties was found to be a good natural source in various applications. However, practical use of chitosan was generally limited due to its weak solubility in neutral pH, its poor workability and low antioxidant activity. For a breakthrough in utilization, the functionalization of chitosan will be a key point, allowing the introduction of desired properties and enlarging the field of its potential applications. Enzymatic or chemical functionalizations of chitosan were carried out based on its reactive groups (-NH2 and -OH). Due to growing safety and environmental concerns, enzymatic methods were constantly investigated as an attractive alternative to toxic and non-specific chemical approaches. This review discusses the mechanisms of enzymatic functionalization and compares the applied systems, enzymes and materials for enzymatic functionalization of chitosan. A focus is also paid concerning the current applications of enzymatically modified chitosan derivatives in the field of biomedical, pharmaceutical, food, environmental and material applications.