This paper reviews studies on dissolution, derivatization, and nanomaterial processing of chitin using an ionic liquid as useful media. Because chitin is the second most abundant polysaccharide on the earth after cellulose, there is major interest in conversion of native chitin resources into various useful materials after proper dissolution in suitable solvents. For the derivatization and nanomaterial processing of chitin, the author has been focusing on ionic liquids because which have been found to be used as good solvents for cellulose in a past decade. The author found that an ionic liquid, 1-allyl-3-methylimidazolium bromide (AMIMBr), dissolved chitin in concentrations up to 4.8 wt% and mixtures of the higher amounts of chitin with AMIMBr gave ion gels. Acetylation, the simplest derivatization, of chitin using acetic anhydride was achieved in the AMIMBr solvent under mild conditions. Furthermore, the chitin nanofibers were fabricated by regeneration technique from the chitin ion gel with AMIMBr using methanol. Moreover, filtration of the chitin nanofiber dispersion with methanol was carried out to give a chitin nanofiber film. The chitin nanofiber-poly(vinyl alcohol) composite film was also prepared from the ion gel by co-regeneration method.