The effect of methylated N-(4-N,N-dimethylaminocinnamyl) chitosan (TM-CM-CS) was investigated on paracellular permeability and its toxicity towards Caco-2 cells. Fluorescein isothiocyanate dextran 4,400 (FD-4) was used as the model compound for paracellular transport. The factors, i.e. the degree of quaternization (DQ) and the extent of N-substitution (ES) of the derivatives, were studied for the effect on transepithelial electrical resistance (TEER) and permeability. The results revealed that at pH 7.4, TM-CM-CS appeared to increase cell permeability in a dose-dependent manner, and the effect was relatively reversible at lower doses of 0.05-0.5 mM. The difference of the DQ and the ES of TM-CM-CS slightly affected the decrease of TEER values and the FD-4 permeability. The cytotoxicity of TM-CM-CS was concentration-dependent and did not cause an acute cytotoxic effect as analyzed by the MTT assay. These studies demonstrated that this novel modified chitosan has the potential to be used as an intestinal absorption enhancer of therapeutic macromolecules.