The objective of this work was to explore the potential of polyethylene glycol-grafted chitosan (PEG-g-chitosan) nanoparticles as a system for improving the systemic absorption of insulin following nasal administration. Insulin-loaded PEG-g-chitosan nanoparticles were prepared by the ionotropic gelation of PEG-g-chitosan solution using tripolyphosphate ions as the crosslinking agent. The nanoparticles were in the size range 150–300 nm, had a positive electrical charge (+16 to +30 mV) and were associated with insulin (loading efficiency 20–39%). The physicochemical properties of nanoparticles were affected by the composition of the copolymer. In vitro insulin release studies showed an initial burst followed by a slow release of insulin. Intranasal administration of PEG-g-chitosan nanoparticles in rabbits enhanced the absorption of insulin by the nasal mucosa to a greater extent than a suspension of insulin-PEG-g-chitosan and control insulin solution. PEG-g-chitosan nanoparticles are promising vehicles for insulin transport through the nasal mucosa.