Uncontrolled bleeding and microbial infections pose significant hurdles in wound healing, and the use of specialized functional dressings is pivotal in overcoming these obstacles. Among the various wound dressings currently under investigation, those based on chitosan and its derivatives have garnered significant attention due to their superior biocompatibility, antimicrobial properties, hemostatic capabilities, and healing promoting ability. In this comprehensive review, we initially delve into the hemostatic capabilities of chitosan, elucidating its interactions with blood cells and plasma proteins. We also dissect the intricate antimicrobial mechanisms of chitosan, which operate through both intracellular and extracellular pathways. The centerpiece of this review is the systematic classification of dressings based on chitosan and its derivatives, across various forms, such as hydrogels, sponges, membranes, fibers, and powders. This is followed by an exhaustive analysis of their hemostatic and antibacterial efficacy in wound healing, providing a robust foundation for further research and the advancement of clinical applications in the field.