The main objective of this study is to prepare chitosan and O-carboxymethyl chitosan and evaluate their biological activities in vitro. In this study, twenty crab shells were collected from locally fish restaurant in the city of Tanta, Egypt. Chitosan has been produced from crab waste by chemical method then modified by introducing carboxymethyl group into its back bone. The antibacterial activity of chitosan and O-carboxymethyl chitosan was tested against multidrug-resistant bacteria by cut-plug method. It was found that the antibacterial activity of modified chitosan was better than the native one. On the other hand, the cytotoxicity of chitosan and O-carboxymethyl chitosan was tested on liver carcinoma cell line HEPG-2 and normal human fibroblast cells (WISH 38). They recorded cytotoxic activities on liver carcinoma cell line, while their toxicities on normal human fibroblast cells were negligible. Finally, their antibacterial activity was evaluated in vivo; the results showed that they were highly active and safe in the treatment of wound infection.