Semi-interpenetrating polymer network beads of chitosan and poly(ethylene glycol) were prepared and characterized for controlled release of drugs. A viscous solution of chitosan and poly(ethylene glycol) in 2% acetic acid was extruded as droplets with the help of a syringe and crosslinked using glutaraldehyde. The structural studies of the beads were performed by using a Fourier transform infrared spectrophotometer and scanning electron microscope. The swelling behavior, solubility, hydrolytic degradation, and loading capacity of the beads for isoniazid were investigated. The structural changes of the beads at pH 2.0 and 7.4 were put forward using the data obtained by infrared and ultraviolet spectroscopy. The prepared beads showed 82% drug-loading capacity, which suggested that these semi-interpenetrating polymer network beads are suitable for controlled release of drugs in an oral sustained delivery system.