The nanoparticles developed are based on chitosan, a biocompatible and biodegradable polysaccharide. The chitosan nanoparticles are formed in an entirely water-based process by electrostatic interactions with other biocompatible molecules. As a prerequisite to understand the fate of such nanoparticles in cells, comprehensive characterization and stability studies serve to identify quantitatively the impact of the raw material characteristics and preparation conditions on the nanoparticle characteristics. Methods included H-1 NMR spectroscopy, dilution viscometry, particle size analysis and electron microscopy. Cytotoxicity and cell uptake experiments on RAW 264.7 murine macrophages and p23 murine endothelial cells were performed to investigate the correlation with nanoparticle characteristics and effect of surface decoration with alginate. Cytotoxicity was assessed by the MTT survival test; cell uptake was monitored by fluorescent microscopy using labeled polymers.