Agricultural wastes are available in large volumes at low cost and have been considered promising sustainable resources for the synthesis of many biopolymers. The agro-industrial waste products such as paddy straw, sugarcane bagasse, and potato peel waste can serve as economical nutritional sources for the cultivation of fungi. Our studies revealed that the growth media supplemented with agro-industrial waste @ 1% paddy straw +1% glucose (w/v) the yield of chitosan (0.315 g/100 ml) was increased. The fungal isolates (Aspergillus flavus strain AF211) showed maximum chitosan production in submerged fermentation (0.533 g/10g paddy straw) as compared to solid state fermentation (0.182 g/10g paddy straw). Therefore, mass production of chitosan from Aspergillus flavus strain AF211 was carried out by submerged fermentation in a bioreactor (BioFlo^R 120) and the yield of chitosan was found to be 5.37 g/l. Further, the chitosan extracted from fungi was estimated for an 88.5% degree of deacetylation.