Chitosan was modified by coupling with linoleic acid through the 1-ethyl-3-(3-dimethylaminopropyl)- carbodiimide-mediated reaction to increase its amphipathicity for improved emulsification. The micelle formation of linoleic acid-modified chitosan in the 0.1 M acetic acid solution was enhanced by O/W emulsification with methylene chloride, an oil phase. The fluorescence spectra indicate that without emulsification the self-aggregation of LA-chitosan occurred at the concentration of 1.0 g/L or above, and with emulsification, self-aggregation was greatly enhanced followed by a stable micelle formation at 2.0 g/L. The addition of 1 M sodium chloride promoted the self-aggregation of LA-chitosan molecules both with and without emulsification. The micelles of LA-chitosan formed nanosize particles ranging from 200 to 600 nm. The LA-chitosan nanoparticles encapsulated the lipid soluble model compound, retinal acetate, with 50% efficiency.