The management of wound healing represents a significant clinical challenge due to the complicated processes involved. Chitosan has remarkable properties that effectively prevent certain microorganisms from entering the body and positively influence both red blood cell aggregation and platelet adhesion and aggregation in the bloodstream, resulting in a favorable hemostatic outcome. In recent years, chitosan-based hydrogels have been widely used as wound dressings due to their biodegradability, biocompatibility, safety, non-toxicity, bioadhesiveness, and soft texture resembling the extracellular matrix. This article first summarizes an overview of the main chemical modifications of chitosan for wound dressings and then reviews the desired properties of chitosan-based hydrogel dressings. The applications of chitosan-based hydrogels in wound healing, including burn wounds, surgical wounds, infected wounds, and diabetic wounds are then discussed. Finally, future prospects for chitosan-based hydrogels as wound dressings are discussed. It is anticipated that this review will form a basis for the development of a range of chitosan-based hydrogel dressings for clinical treatment.