Impurity-free, controlled synthesis of iron oxide nanoparticle, in ultrapure water and chitosan, using laser ablation technique and its application for type II diabetes management through oral delivery of insulin-loaded iron oxide-chitosan nanocomposite is presented. The purity of the nanoparticle is monitored by laser-induced breakdown spectroscopy technique. The synthesized iron oxide nanoparticle was characterized by UV/Vis absorption spectroscopy, and morphological study was performed by scanning electron microscope. The intensity of absorption peak and wavelength corresponding to peak of the nanoparticle prepared in water and chitosan is dependent on the laser energy used for ablation purpose. Red shift in the absorption peak wavelength was observed by increasing laser energy. In addition to red shift, an increase in intensity of absorption peak was also seen when ablating laser energy was increased. The appearance of a weak peak around 295 nm was observed in iron oxide-chitosan nanocomposite. The spherical shape of the nanoparticle synthesized at the lower laser energy has gradually changed to triangular and irregular shaped structures as ablating laser energy was increased. The spherical nanoparticles loaded with insulin were used for oral delivery for diabetic management. The iron oxide-chitosan nanocomposite loaded with insulin has resulted in reduction in blood glucose level in mild diabetic, subdiabetic, and severely diabetic rats; more than 51 % reduction in blood glucose level, compared to the control group, has been achieved in the present work.