Chitosan oligosaccharide (COS) has become of great interest in recent years because of its worthy biological activities. This study aims to produce COS using the enzymatic method, and investigates Paenibacillus sp. TKU047, a chitinolytic-producing strain, in terms of its chitosanase productivity on several chitinous material-containing mediums from fishery process wastes. The highest amount of chitosanase was produced on the medium using 2% (w/v) squid pens powder (0.60 U/mL) as the single carbon and nitrogen (C/N) source. The molecular mass of TKU047 chitosanase, which could be the smallest one among chitinases/chitosanases from the Paenibacillus genus, was approximately 23 kDa according to the sodium dodecyl sulfate-polyacrylamide gel electrophoresis (SDS-PAGE) method. TKU047 chitosanase possessed the highest activity at 60 °C, pH 7, and toward chitosan solution with a higher degree of deacetylation (DDA) value. Additionally, the hydrolysis products of 98% DDA chitosan catalyzed by TKU047 chitosanase showed the degree of polymerization (DP) ranging from 2 to 9, suggesting that it was an endo-type activity chitosanase. The free radical scavenging activity of the obtained chitosan oligosaccharide (COS) was determined. The result showed that COS produced with Paenibacillus sp. TKU047 chitosanase expressed a higher 2,2-diphenyl-1-picrylhydrazyl (DPPH) radical scavenging activity than that from the commercial COSs with maximum activity and IC50 values of 81.20% and 1.02 mg/mL; 18.63% and 15.37 mg/mL; and 15.96% and 15.16 mg/mL, respectively. As such, Paenibacillus sp. TKU047 may have potential use in converting squid pens waste to produce chitosanase as an enzyme for bio-activity COS preparation.