A delivery system employing nanoparticles of thiolated chitosan which complex with nucleic acids or other drugs. The system utilizes an approximately 33 kDa thiol-modified chitosan derivative resulting in highly effective gene delivery. Thiolation of chitosan resulted in reduced density of positive charges and DNA binding capacity. However, thiolated chitosan carrying a plasmid DNA expressing a green fluorescent protein (GFP) showed significantly higher GFP expression in various cell lines and in vivo in mice. Sustained delivery of plasmid DNA from thiolated chitosan was achieved by crosslinking thiolated chitosan/plasmid DNA nanocomplexes through inter- as well as intramolecular disulfide bonds under the physiological conditions. Thiolated chitosan nanoparticles have a great potential for gene therapy and tissue engineering.