Chitosan, a naturally occurring polysaccharide derived from chitin, has been widely applied in drug delivery, tissue regeneration, wound healing, blood coagulation, and immunostimulation due to its well-known biocompatibility and biodegradability. Additionally, because of its unique cationic nature and the gel/film/matrix-forming capabilities, chitosan has been considered as a promising material for the development of medical devices. The current concept for developing medical devices often comprises the functionality of controlled release of bioactive agents such as drugs, proteins, or growth factors in order to fulfill their clinical applications. However, in biological fluids, the hydrophilic chitosan matrices may swell and deform dramatically through hydration, thus resulting in a rapid loss of the encapsulated drugs from the delivery device. Considerable efforts have therefore been made in chemically modifying chitosan to improve its physical properties and functionality. This review article focuses on the versatile modifications of chitosan matrices (ionic or chemical crosslinking) and the most recent research activities in drug-eluting devices, including vascular stents, artificial skin, bone grafts, and nerve guidance conduits.