A method is disclosed for improving the efficiency of producing chitin and chitosan, particularly biocompatible chitosan. Crustacean shells are maintained at a high temperature for a sufficient time to convert most of the chitin in the shells to an amorphous form. The shells are then rapidly cooled, for example by plunging into liquid nitrogen, so that most of the chitin in the shells remains in the amorphous form. These "quenched" shells are then deproteinized and demineralized to produce chitin. The chitin may be deacetylated to produce chitosan. High purity chitin or chitosan is thereby produced at a lower cost than has been possible using previous methods. Biocompatible chitosan produced by this process may be used for the delivery of cells or bioactive agents, or for other applications. It is believed that the heating followed by immediate quenching enhances the formation of chitin chains in an amorphous or a relaxed form, making them more susceptible to attack by acid or alkali during the subsequent treatment steps. Making the chitin amorphous allows the more efficient and economical production of chitosan, using lower quantities of chemicals such as hydrochloric acid and sodium hydroxide, thus making the entire production process both more economical and less polluting.