Chitosan (N-acetyl D- glucosamine) is a natural polysaccharide present in crustacean shells, some fungi and yeast. It is a versatile polysaccharide irrespective of its sources. In the present research work, fungal chitosan is characterized for its anti proliferative effect on HeLa and MCF-7 tumour cell lines by MTT assay. The results showed that GI50 of fungal chitosan was found to be 75µg/ml and 80µg/ml on HeLa and MCF-7 cells respectively.