Recent years have witnessed ever expanding use of biosensors in the fields of environmental monitoring, homeland security, pharmaceutical, food and bioprocessing, and agricultural industries. To produce effective and reliable biosensors, good quality immobilization of biological recognition elements is critical. Chitosan and its nanocomposites emerge as an excellent immobilization matrix on biosensor surface. As a natural polysaccharide, chitosan has many useful characteristics, such as high permeability and mechanical strength, biocompatibility and non-toxicity, availability, and low cost. Due to the presence of amino and hydroxyl groups on chitosan, chitosan can easily crosslink with a variety of nanomaterials. This investigation of chitosan nanocomposite-based biosensors presents recent development and innovations in the preparation of chitosan nanocomposites in coordination with biosensors for various bio-detection applications, including chitosan nanocomposites formed with carbon nanomaterials, various inorganic and biological complexes. These chitosan nanocomposite based biosensors have demonstrated good sensitivity selectivity and stability for the detection of different types of targets ranging from glucose, proteins, DNAs, small biomolecules to bacteria. It is in our hope that this review will offer guidance for the development of novel biosensors and open up opportunities in the field of biosensor research.