The development of injectable nanoparticulate “stealth” carriers for protein delivery is a major challenge. The objective of this work was to investigate the possibility of achieving the controlled release of a model protein, insulin, from PEG-grafted chitosan (PEG-g-chitosan) nanoparticles (mean diameter 150–300 nm) prepared by the ion gelation method. Insulin was efficiently incorporated into the nanoparticles, and reached as high as 38%. In vitro release showed that it could control the insulin release by choosing the composition, loading and release temperature. We observed that the composition of the nanoparticle surface (C/O ratio) increased from 2.40 to 3.23, with an increase in the incubation time. Therefore, we concluded that during this time, insulin release from PEG-g-chitosan nanoparticles followed a diffusion mechanism in which erosion was negligible. The experiments also demonstrated that PEG-g-chitosan helped to maintain the natural structure of the protein entrapped in the nanoparticles.