Disclosed are methods of producing modified microcrystalline chitosan. Chitosan in aqueous solution is degraded enzymatically, hydrolytically or oxidatively. The chitosan solution is then alkalized with agitation using aqueous hydroxides and/or their salts to attain a pH not lower than 7.0. The precipitated modified microcrystalline chitosan is highly pure and may be concentrated and dried according to known methods. Methods according to the invention also include methods by which an aqueous solution of chitosan is first alkalized using hydroxides and/or their salts to a pH not lower than 7.0. Then the precipitated microcrystalline chitosan is subjected to enzymatic or oxidative degradation to achieve a desired average molecular weight and polydispersity. The product is highly pure and may be concentrated and dried according to known methods.