Chitosan is an amino polysaccharide deacetylated from chitin, which is naturally occurring in large amount in shells of marine crustaceans. Chitosan is soluble in weakly acidic aqueous solutions and possesses an adhesive property. Chitosan has received much attention for medical and industrial applications; however, only limited studies have been conducted on the application of chitosan as a wood adhesive because of its bonding properties on wood are poor. To improve the adhesive quality of chitosan resin, an innovative study on chitosan adhesives has been conducted to use selected fungal species to modify chitosan and improve its bonding property, to synthesize non-formaldehyde resin with the fungus-modified chitosan and to prepare UF and PF resins enhanced with the fungal modified chitosan. Bonding properties of wood composites made with these chitosan-based green wood adhesives in terms of lap-shear strength were significantly improved in this study. Unmodified chitosan solution was not compatible with ammonium lignosulfonate liquid, liquid PF resin, soybean resin, PF powder, or soybean flour, but was compatible with UF resin (liquid), PVA resin, or phenol. With addition of chitosan in UF and PVA resins, both dry and wet shear strengths of plywood panels were improved comparing with the use of the control UF and PVA resins without chitosan. A number of chitosan and chitosan-reinforced UF resins as binder for particleboard manufacturing have been prepared. Six (6) types of particleboards with different levels of resin loadings and press conditions were manufactured and evaluated for the bond quality of chitosan and chitosan-reinforced UF resins. The results showed that all formulations of chitosan-UF adhesives were able to produce particleboards with nice appearance, even those made of only with 1% of chitosan resin alone. All chitosan resins, alone or added to UF resins, had a better IB strength than UF control resin. The panels made of 1% of chitosan resin plus 66% of UF resin in a 1:1 ratio had the highest IB strength.