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Abstract: Cholesterol hydrophobically modified chitosan (CS-CH) containing 1.7–4.7 cholesterol groups per 100 anhydroglucosamine units of chitosan were synthesized by an EDC-mediated coupling reaction. The physicochemical properties of the self-aggregated nanoparticles in physiological saline were studied using transmission electron microscopy, dynamic light scattering, and fluorescence spectroscopy. The mean diameters of all samples were less than 230nm, and the critical aggregation concentration (CAC) of all self-aggregated nanoparticles in physiological saline less than 4.0×10−2 mg/ml. Both the mean diameters and the CAC decreased slightly with the increasing degree of substitution (DS) by hydrophobic groups. The self-aggregated CS-CH nanoparticles were radiolabeled by 99mTc, their ocular distribution was investigated using single photon emission computed tomography (SPECT) and scintillation counter. The CS-CH nanoparticles retained at the procorneal area, and no radioactivity was found in the posterior segment. The drug-loading and release behavior of the nanoparticles were investigated using Cyclosporine A (CyA) as the model drug. CyA was physically entrapped in the nanoparticles during the dialysis process, and the drug-loading ratio was 6.2%. A sustained release of CyA from CS-CH nanoparticles was observed. The results showed that CS-CH nanoparticles might represent an interesting vehicle to enhance the therapeutic index of clinically challenging drugs with potential application at extraocular level. [Copyright &y& Elsevier]