The principle objective of this study was to develop and characterize redox responsive polymeric nanoparticles (PNPs) as a stimuli responsive drug delivery system. The chitosan-cystamine-methoxy poly(ethylene glycol) (CH-SS-mPEG) copolymer was synthesized by conjugation of cystamine appended chitosan with carboxylic acid-terminated mPEG and characterized by FTIR, 1H NMR, XRD analysis and colorimetric assay. This copolymer could be formulated as 5-Fluorouracil (5-FU) loaded PNPs and the characteristics of PNPs were evaluated. Moreover, folic acid functionalized PNPs were prepared for folate receptor targeted drug delivery. Drug release studies indicated that the redox sensitive PNPs were stable in physiological condition while quickly releasing 5-FU in the trigger of redox potential due to the cleavage of the disulfide linkages. In contrast, less quantity of drug was released from the reduction insensitive chitosan-g-methoxy poly(ethylene glycol) (CH-g-mPEG) based PNPs under both reduction sensitive and non-reductive conditions. From the cytotoxicity studies, it was evident that 5-FU loaded PNPs had higher toxicity against MCF7 cells when compared to 5-FU free PNPs. Subsequently, cellular uptake studies showed significantly increased internalization of folic acid attached PNPs. In conclusion, the developed PNPs appeared to be of great promise in redox responsive drug release for targeted drug delivery.