An aqueous nanoparticle delivery system has been developed which employs the oppositely charged polymers polyethylenimine (PEI) and dextran sulfate (DS) with zinc as a stabilizer. It is found that the pH of PEI solutions, the weight ratio of the two polymers, and zinc sulfate concentrations all play significant roles in controlling particle size. Spherical particles of 250 nm mean diameter were produced under optimal conditions which have a zeta potential of approximately +30 mV. Up to 90% drug entrapment efficiency was observed when insulin was used as a model protein drug. No degradation products were detected during in vitro dissolution or in potency studies. Circular dichroism (CD) spectra showed no significant conformational changes compared to free insulin under optimized formulation conditions. Rapid release characteristics were observed in in vitro dissolution studies. Biological activity in steptozotocin-induced diabetic rats, however, exhibited a prolonged hypoglycemic effect. This system offers the following advantages: (1) ease of manufacturing under mild preparation conditions; (2) employment of completely aqueous processing conditions; (3) use of biocompatible polymers which can be prepared aseptically; (4) ability to control particle size; (5) a high level of drug entrapment and (6) an ability to preserve protein secondary structure and biological activity.