Anticancer drugs are typically distributed non-specifically in the body, where they affect both cancerous and normal cells. This limits the drug level achievable within the tumor, compromising the therapeutic efficacy, and results in potential toxic effects on normal tissues. Targeted delivery of chemotherapeutics exclusively to cancer cells is the focus of intensive research for improvement of anticancer therapy. Various drug delivery systems have been investigated for this purpose, with therapeutic-carrying polymeric nanoparticulate systems designed for specific targeting of tumor cells receiving special interest. Chitosan, a natural polymer derived from crustacean shells, has attracted particular attention as a drug carrier. The simple and mild preparation methods, low toxicity, good stability, controlled drug release and the ability to overcome biological barriers have made chitosan-based nanoparticles popular in drug and gene delivery applications. Chitosan nanoparticles have been fabricated with optimal size and surface characteristics in order to tailor the behavior within the biological system, including circulation time, as well as passive and active cancer targeting. Folic acid is widely employed as a ligand targeting cancerous cells as its receptor which ‘shuttles’ folic acid into the cells via endocytosis is over-expressed on the surface of many human epithelial cancer cells. Incorporating folic acid into chitosan-based drug and gene delivery formulations renders the systems with an efficient targeting capacity. Furthermore, it is possible to formulate chitosan nanocarriers that display multiple useful characteristics extending beyond targeted delivery. The versatility of these systems is also being exploited in nanotheranostics.