The objective of the present study was to prepare and characterize low molecular weight chitosan (LMWC) with different molecular weight and degrees of deacetylation (DDA) and to optimize their use in oral insulin nano delivery systems. Water in oil nanosized systems containing LMWC-insulin polyelectrolyte complexes were constructed and their ability to reduce blood glucose was assessed in vivo on diabetic rats. Upon acid depolymerization and testing by viscosity method, three molecular weights of LMWC namely, 1.3, 13 and 18 kDa were obtained. As for the DDA, three LMWCs of 55%, 80% and 100% DDA were prepared and characterized by spectroscopic methods for each molecular weight. The obtained LMWCs showed different morphological and in silico patterns. Following complexation of LMWCs with insulin, different aggregation sizes were obtained. Moreover, the in vivo tested formulations showed different activities of blood glucose reduction. The highest glucose reduction was achieved with 1.3 kDa LMWC of 55% DDA. The current study emphasizes the importance of optimizing the molecular weight along with the DDA of the incorporated LMWC in oral insulin delivery preparations in order to ensure the highest performance of such delivery systems.