Herein are reported the synthesis of a conjugate of chitosan with l-leucine, the preparation of nanoparticles from both chitosan and the conjugate for use in pulmonary drug delivery, and the in vitro evaluation of toxicity and inflammatory effects of both the polymers and their nanoparticles on the bronchial epithelial cell line, BEAS-2B. The nanoparticles, successfully prepared both from chitosan and the conjugate, had a diameter in the range of 10-30 nm. The polymers and their nanoparticles were tested for their effects on cell viability by MTT assay, on trans-epithelial permeability by using sodium fluorescein as a fluid phase marker, and on IL-8 secretion by ELISA. The conjugate nanoparticles had a low overall toxicity (IC50 = 2 mg/mL following 48 h exposure; no induction of IL-8 release at 0.5 mg/mL concentration), suggesting that they may be safe for pulmonary drug delivery applications.