The biocompatibility, biodegradability, and stimuli-responsiveness of hydrogels, which possess three-dimensional networks of polymers, make them extremely promising materials for drug delivery applications. Extensive research and commercial interest have been sparked by their capacity to encapsulate medicinal substances and enable controlled, prolonged, or targeted release. Notably, chitosan-based hydrogels have drawn interest due to their superior antibacterial, biodegradable, pH-responsive, and biocompatible qualities, which make them ideal for targeted and oral drug administration. Continuous advancements in hydrogel design are tackling major obstacles in gastrointestinal distribution, even in the face of difficulties with oral formulations like insulin. Drug release kinetics and degradation can be precisely controlled by chemically modifying chitosan hydrogels, which react to various stimuli such as pH, temperature, light, and electric and magnetic fields. Their porous structure and mechanical strength further enhance their utility in advanced delivery systems. In line with sustainability objectives, recent advancements highlight environmentally friendly methods by creating chitosan hydrogels from biomass-derived materials. By permitting site-specific combination treatments and reducing side effects, these hydrogels show promise in oncology for improving the effectiveness of immunotherapy, phototherapy, and chemotherapy. Chitosan-based hydrogels are multipurpose platforms that mark a major breakthrough in the creation of intelligent, stimuli-responsive drug delivery systems designed to satisfy intricate therapeutic requirements in contemporary medicine.