This review aims to explore different sources of chitin and methods of chitosan production with industrial consideration. This article first discussed different sources of chitin for industrial scale production, with considerations given to both their environmental impacts and commercialization potential. Secondly, this article reviews the two categories of chitosan preparation – chemical methods and biological methods - based on existing publications which used lobster by-products as a feedstock source. The mechanisms of the chemical methods are firstly summarized, and then the different chemical agents and reaction parameters used are discussed. Next, both enzymatic and fermentation-based approaches are reviewed under biological methods and compared with chemical methodologies, with lactic fermentation methods as the major focus. This article concludes that lobster cephalothorax could be an ideal source for chitosan preparation on an industrial scale; and chemical methods involve simpler processing overall, while produce chitosan with stronger bioactivities because of lower molecular weight (MW) and higher degree of deacetylation (DD) achieved by the products. Moreover, due to biological methods inevitably necessitating further chemical processing, an approach involving some unconventional chemical methods has been regarded as a more suitable strategy for industrial scale chitosan production.