Novel nanoparticles (NPs) coated with chitosan which allow insulin to be administered orally were developed. The NPs could transiently and reversibly open the tight junctions in Caco-2 cell monolayers, thus increasing their paracellular permeability. After oral administration of the FITC-labelled NPs, fluorescence signals, co-localized with ZO-1 proteins, were observed at cellcell contact sites in the small intestine of rats. The intensity of fluorescence signals observed at the duodenum was stronger and appeared at a deeper level than at the jejunum and the ileum. The insulin-loaded NPs suspended in water were stable in typical storage conditions. Release of the loaded insulin depended greatly on the stability of the NPs at distinct pH environments. Oral administration of insulin in the form of NPs in diabetic rats demonstrated a sustained effect of decreasing the blood glucose level over at least 10 h, indicating the effect of the prepared NPs in enhancing the absorption of fully functional insulin.