Shrimp farming has been a significantly growing seafood production sector, due to their richness in amino acids, bioactive peptides, proteins, and other useful nutrients. While processing, it generates minerals, vitamins, enzymes, pigments, and protein-enriched waste byproducts such as cephalothorax, shells, etc. Among these, shrimp shell is a potential source of chitooligosaccharide (CHOS), a hydrolyzed product of chitosan. CHOS is produced via chemical, physical, and enzymatic methods. The obtained CHOS is water soluble and has a molecular weight (MW) varied between 3 and 10 kDa with a degree of depolymerization (DP) ranging from 2 to 20. CHOS possessed excellent antioxidant and antimicrobial activities, which plays an important role to inhibit oxidation of lipids/proteins and microbial growth in foods. Hence, its application in the food industry as a natural preservative has been exploited widely. In addition, CHOS has been widely studied for its anti-diabetes, anti-obesity, digestive enzyme inhibitory activities as well as other nutraceutical properties. Overall, CHOS has several bioactivities related to food preservation and health promotion, which can provide health benefits and improved quality and extend the shelf-life of various foods.