The chitinous content of crustacean byproducts is an attractive proposition for the production of chitin-oligosaccharides that can be exploited in various biotechnological applications. The currently applied methods for the preparation of chitin-oligosaccharides depend mainly on either chemical or enzymatic hydrolysis of chitin. These methods are suffering from some drawbacks that confined its industrial application. In the current study, the production of chitin-oligosaccharides was performed by the direct bacterial hydrolysis of shrimp byproducts using Bacillus cereus strain SSW1. A sequential optimization of the hydrolysis process was achieved by applying Plackett-Burman design followed by central composite design. The optimum chitin-oligosaccharide level of 16.4mg/g was achieved under the optimized fermentation conditions in which 5g of microwave pretreated shrimp byproducts moistened with 10mL of moistening agent composed of K₂HPO₄, 1.5%; MgSO₄, 0.01%; KCl, 0.1%, and FeSO₄.7H₂O, 0.01% was incubated for 4days at 37^◦C. After the additional autoclaving process, the amount of the reducing sugars released in the fermentation broth was increased by 32% to reach 21.7mg/g. The resulted product was analyzed by thin-layer chromatography and Fourier Transform Infrared Spectroscopy, confirming the release of a mixture of chitin-oligosaccharide. Finally, the in vitro prebiotic and antioxidant activity of the purified oligosaccharides was determined.