Chitosan, a biodegradable and natural biopolymer derived from chitin, gained widespread interest due to its biocompatibility, biodegradability, and numerous functional properties. Its natural form, however, exhibits numerous shortcomings, such as limited solubility, mechanical properties, and stability; hence, it inhibits its broader application in environmentally related aspects. Chemical modification of chitosan appears to offer a promising strategy for addressing these deficiencies by introducing functional groups that enhance its physicochemical and biological properties. Here, the chapter presents various chemical modification methods, including esterification, graft copolymerization, crosslinking, and quaternization, and their impact on enhancing the solubility, adsorption capacity, antimicrobial activity, and mechanical properties of chitosan. Focus is placed on illuminating the various modifications in preparing custom-tailored chitosans for specific environment-related applications, such as wastewater treatment, remediation of contaminated soils, and biodegradable packaging. Recent findings on designing enhanced chitosan composites and nanomaterials for improved performance in achieving sustainable material technology are also outlined to provide a holistic understanding. Through a focus on the linkage between chemical structure and functional properties, the chapter highlights the optimization of chitosan derivatives for enhanced environmental-related applications. As a tactic, the chemical modification of chitosan holds considerable promise in developing eco-friendly, efficient, and cost-effective technologies for addressing key environmental challenges.