The aim of this study was to investigate the effects of a type of hydrophobic moiety, extent of N-substitution (ES), and degree of quaternization (DQ) of chitosan (CS) on the transepithelial electrical resistance and permeability of Caco-2 cells monolayer, using fluorescein isothiocyanate dextran 4,400 (FD-4) as the model compound for paracellular tight junction transport. CS was substituted with hydrophobic moiety, an aliphatic aldehyde (n-octyl) or aromatic aldehyde (benzyl), for the improved hydrophobic interaction with cell membrane, and they were quaternized with Quat-188 to render CS soluble. The factors affecting the epithelial permeability have been evaluated in the intestinal cell monolayers, Caco-2 cells. Cytotoxicity was evaluated by using the trypan blue and MTT viability assay. The results revealed that at pH 7.4 CSQ appeared to increase cell permeability in dose-dependent manner, and this effect was relatively reversible at the lower doses of 0.05-1.25 mM. The higher DQ and ES caused the higher permeability of FD-4. Cytotoxicity of CSQ was concentration, %DQ, and %ES dependent. Substitution with hydrophobic moiety caused decreasing in permeability of FD-4 and cytotoxicity by benzyl group had more effect than octyl group. These studies demonstrated that these novel modified chitosan derivatives had potential for using as absorption enhancers.