The objective of this research was to improve the solubility of chitosan at neutral or basic pH using the Maillard-type reaction method. To prepare the water-soluble chitosans, various chitosans and saccharides were used under various operating conditions. Biological and physicochemical properties of the chitosan-saccharide derivatives were investigated as well. Results indicated that the solubility of modified chitosan is significantly greater than that of native chitosan, and the chitosan-maltose derivative remained soluble when the pH approached 10. Among chitosan-saccharide derivatives, the solubility of chitosan-fructose derivative was highest at 17.1 g/l. Considering yield, solubility and pH stability, the chitosan-glucosamine derivative was deemed the optimal water-soluble derivative. Compared with the acid-soluble chitosan, the chitosan-glucosamine derivative exhibited high chelating capacity for Zn(2+), Fe(2+) and Cu(2+) ions. Relatively high antibacterial activity against Escherichia coli and Staphylococcus aureus was noted for the chitosan-glucosamine derivative as compared with native chitosan. Results suggest that the water-soluble chitosan produced using the Maillard reaction may be a promising commercial substitute for acid-soluble chitosan.