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The production of the amino polysaccharide (chitosan) from crustacean sources has faced many hindrances due to environmental, seasonal and noneconomic issues. On the other hand, mycogenic chitosan has many advantages that make it suitable for many medical and nutritional applications over the non-mycological counterparts. A number of fungal isolates have been screened for chitosan production, where the most potent fungal isolate has been genetically identified using 18S rDNA and selected to be the focus of the current study. The factors affecting chitosan production by the selected fungal isolate have been studied and numerically optimized and validated using Box–Behnken design. The produced chitosan has been collected, purified and characterized for the degree of deacetylation (DDA), molecular weight (MW), water-binding (WBC) and fat-binding capacities (FBC). Results showed that Aspergillus terreus (F3) was the most potent chitosan-producing fungal isolate with maximum validated productivity (2.92 g/l) at the following conditions: glucose, 35.6 g/l; (NH4)2SO4, 4.6 g/l; CaCl2, 0.29 g/l; and pH 7.9 at 23.2 °C for 10 days. The purified chitosan has the following characteristics: 71.9%, DDA; 54.1165 KD, MW; 58.6%, WBC; and 47.6%, FBC. The features and applications of fungal chitosan are not fully uncovered which necessitates further studies. [ABSTRACT FROM AUTHOR]