Encapsulation of plasmid DNA (pDNA) in nanoparticulate gene delivery systems offers the possibility of control in dosing, enhanced pDNA uptake, increased resistance to nuclease degradation and sustained release of functionally active pDNA over time. Extracellular matrix based biomaterial i.e. hyaluronan (HA) was used to encapsulate pDNA (pCMV-GLuc, Gaussia Luciferase reporter plasmid DNA having CMV promoter) in submicron size particulate system. Nano size range (400-600 nm) pDNA loaded hyaluronan nanoparticles were formulated by ionic gelation followed by the cross-linking method with high encapsulation efficiency (75-85%). The particle preparation process was further optimized for molecular weight, cross-linking method, cross-linking time and plasmid/polymer ratio. The entrapped plasmid maintained its structural and functional integrity as revealed by agarose gel electrophoresis. The pDNA was released from the hyaluronan nanoparticles in a controlled manner over a period of one month. In vitro transfection by one-week released pDNA from nanoparticles with transfecting agent branched polyethyleneimine (bPEI) resulted in significantly higher expression levels than those in pDNA alone which demonstrated the functional bioactivity of released pDNA. For cellular localization studies, the hyaluronan nanoparticles encapsulated with FITC-dextran were incubated with adipose derived stem cells (ADSCs) and localization in the cellular environment were investigated. The results of this study illustrate that hyaluronan nanoparticles were rapidly internalized by the cells through nonspecific endocytosis and remained intact in the cytosol for up to 24 h.