Thymoquinone (TQ), a major bioactive compound of Nigella sativa seeds has several therapeutic properties. The main drawback in bringing TQ to therapeutic application is that it has poor stability and bioavailability. Hence a suitable carrier is essential for TQ delivery. Recent studies indicate biodegradable polymers are potentially good carriers of bioactive compounds. In this study, polyethylene glycol (PEG) modified chitosan (Cs) nanocapsules were developed as a carrier for TQ. Aqueous soluble low molecular weight Cs and PEG was selected among different biodegradable polymers based on their biocompatibility and efficacy as a carrier. Optimisation of synthesis of nanocapsules was done based on particle size, PDI, encapsulation efficiency and process yield. A positive zeta potential value of +48 mV, indicating good stability was observed. Scanning electron microscope and atomic-force microscopy analysis revealed spherical shaped and smooth surfaced nanocapsules with size between 100 to 300 nm. The molecular dispersion of the TQ in Cs PEG nanocapsules was studied using X-ray powder diffraction. The Fourier transform infrared spectrum of optimised nanocapsule exhibited functional groups of both polymer and drug, confirming the presence of Cs, PEG and TQ. In vitro drug release studies showed that PEG modified Cs nanocapsules loaded with TQ had a slow and sustained release.