Chitosan (CS), a natural biopolymer, has been extensively explored for multiple applications including tissue engineering, gene therapy, bioimaging, and sewage treatment due to its abundant availability, intrinsic biocompatibility, biodegradability, and tunable biological properties. Nevertheless, the actual use of CS is limited because of its water-insolubility in physiological circumstances, which could be optimized by chemical modifications via active side groups. Etherification is one of the most widely used reactions to obtain water-soluble CS derivatives, such as hydroxybutyl CS (HBC). HBC, synthesized by grafting hydroxybutyl groups to the functional hydroxyl and amino groups of CS skeleton, has been demonstrated to possess superior biological properties over those of CS, especially satisfactory water solubility in neutral condition and reversible stimulus-response against external heat. Meanwhile, the unique characteristics of thermally sensitive "sol-gel" and "sol-micelle" transition have gained tremendous attention, which differ in heterogeneously and homogeneously synthesized HBC. Herein, we discuss the synthesis (heterogeneously and homogeneously) of HBC, favorable physiochemical properties of HBC, and HBC-centered biocomposites in a range of formulations or dosage forms such as sponges, gels, nanoparticles, nanofibers, and films. Meanwhile, we summarize the potential bioapplications and trends of HBC and HBC centered biocomposites and offer our perspectives on the plausible advances in this field in the near future.