In accordance with the present invention there is provided a new composition and method for chemically modifying chitosan, including N-substituting or N-cross-linking, under homogeneous conditions by providing neutral aqueous chitosan solutions with enhanced reactivity. The method comprises the steps of i) preparing a clear aqueous solution of chitosan, said solution comprising 0.1 to 10% by weight of a chitosan, and 0.1 to 20% by weight of at least one buffering agent having a pKa between 6.0 and 7.6, said solution having a pH ranging from 6.8 to 7.2; and ii) dissolving homogeneously at least one reagent into the solution of step a), said reagent being reactive toward amine groups of chitosan; and said reagent being at a concentration from 0.01 to 10% by weight. The chitosan in the aqueous solution is chemically modified or cross-linked by a selective substitution on the amino group of chitosan.