This work introduces a novel chitosan-based siRNA nanoparticle delivery system for RNA interference in vitro and in vivo. The formation of interpolyelectrolyte complexes between siRNA duplexes (21-mers) and chitosan polymer into nanoparticles, ranging from 40 to 600 nm, was shown using atomic force microscopy and photon correlation spectroscopy. Rapid uptake (1 h) of Cy5-labeled nanoparticles into NIH 3T3 cells, followed by accumulation over a 24 h period, was visualized using fluorescence microscopy. Nanoparticle-mediated knockdown of endogenous enhanced green fluorescent protein (EGFP) was demonstrated in both H1299 human lung carcinoma cells and murine peritoneal macrophages (77.9% and 89.3% reduction in EGFP fluorescence, respectively). In addition, Western analysis showed approximately 90% reduced expression of BCR/ABL-1 leukemia fusion protein while BCR expression was unaffected in K562 (Ph(+)) cells after transfection using nanoparticles containing siRNA specific to the BCR/ABL-1 junction sequence. Effective in vivo RNA interference was achieved in bronchiole epithelial cells of transgenic EGFP mice after nasal administration of chitosan/siRNA formulations (37% and 43% reduction compared to mismatch and untreated control, respectively). These findings highlight the potential application of this novel chitosan-based system in RNA-mediated therapy of systemic and mucosal disease.