Chitin and chitosan-based nanofibers (ChNFs), derived from renewable sources, have emerged as promising biomaterials due to their unique properties such as high surface area, porosity, biocompatibility, and biodegradability. This review provides a comprehensive overview of ChNF extraction and synthesis, focusing on both top-down and bottom-up approaches. A comparative analysis of these methods is presented, highlighting the challenges, opportunities, environmental impact, cost-effectiveness, and quality consistency associated with each. The advantages of ChNFs over similar nanomaterials are elucidated, emphasizing their diverse applications in biomedical and environmental fields. Biomedical applications include drug delivery, tissue engineering, cancer treatment, wound healing, and biosensing. Environmental applications encompass water treatment, air filtration, agriculture, and biodegradable packaging. Despite their potential, challenges remain, including low solubility, unstable mechanical properties, and inconsistent quality, which limit their widespread use. This review also examines recent advancements in ChNF research, aiming to guide the development of efficient and environmentally friendly synthesis methods. By encouraging innovation in ChNF-based nanotechnologies, this research contributes to a more sustainable future.