A water-soluble chitosan derivative namely, N-(2-hydroxy) propyl-3-trimethylammonium chitosan chloride (HTCC) was synthesized by the reaction of chitosan with glycidyltrimethyl ammonium chloride in a neutral aqueous condition and solution blended with polyacrylonitrile (PAN) in an organic solvent. Polymeric films were made by casting, and they were dyed with an acid dye, a basic dye, and mixture of them. Results obtained from differential scanning calorimetry, scanning electron microscopy, and dyeing show that these polymers are immiscible even at low percentage of HTCC (lower than 20%). However, at higher ratio, the phase separation takes place. Fibers obtained from this blend system by wet-spinning technique show a good mechanical properties and increasing the amount of HTCC causes an increment in the mechanical strength of the fibers up to 20% of HTCC and beyond that due to phase separation mechanical strength reduces. Blending PAN with HTCC improves the dyeing behavior of the films and fibers. (c) 2008 Wiley Periodicals, Inc.