The study was aimed at the evaluation of N-vinyl pyrrolidone (NVP) incorporated polymethacrylic acid-chitosan microparticles for oral drug delivery applications. Poly (methacrylic acid)-chitosan (PMC) and poly(methacrylic acid-vinyl pyrrolidone)-chitosan (PMVC) microparticles were prepared by an ionic-gelation method. Mucoadhesion behaviour of these particles was evaluated by ex-vivo adhesion method using freshly excised rat intestinal tissue. Cytotoxicity and absorption enhancing property of PMC and PMVC particles were evaluated on Caco 2 cell monolayers. Protease enzyme inhibition capability and insulin loading/release properties of these hydrogel particles was evaluated under in vitro experimental conditions. Addition of NVP units enhanced the mucoadhesion behavior of PMC particles on isolated rat intestinal tissue. Both PMC and PMVC particles were found non-toxic on Caco 2 cell monolayers and PMC particles was more effective in improving paracellular transport of fluorescent dextran across Caco 2 cell monolayers as compared to PMVC particles. However, protease inhibition efficacy of PMC particles was not significantly affected with NVP addition. NVP incorporation improved the insulin release properties of PMC microparticles at acidic pH. Hydrophilic modification seems to be an interesting approach in improving mucoadhesion capability of PMC microparticles.