Chitosan-N-trimethylaminoethylmethacrylate chloride-PEG (CS-TM-PEG) copolymers were synthesized in order to improve the solubility of chitosan in physiological environment, and enhance the biocompatibility of quaternized chitosan. The result of 1H NMR confirmed that PEG had been combined with amino groups of quaternized chitosan. The profile of hemolysis assay showed that Chitosan-N-trimethylaminoethylmethacrylate chloride (CS-TM) copolymer exhibited hemolytic activity from 10.31% to 13.58%, while CS-TM-PEG copolymer had hemolytic activity from 4.76% to 7.05% at copolymer concentrations from 250 to 2000 lg/ml. Through PEG modification, the hemolytic activity could be reduced to a half. CS-TM-PEG copolymer-insulin nanoparticles were prepared based on ionic gelation process of positively charged copolymers and negatively charged insulin. The nanoparticles were characterized in terms of particle size, TEM, association efficiency and in vitro release. These nanoparticles were 200-400 nm in size and insulin association efficiency of optimal formulations was found up to 90%. In vitro release showed that the nanoparticles provided an initial burst release followed by a sustained release with the sensitivity of ionic strength and pH values.