New basal insulin formulation was designed and their structural characteristics were investigated in vitro and biological activities in type 1 diabetic rats. Zinc-crystallized insulin was physically loaded into hydrophobically modified glycol chitosan (HGC) nanoparticles by a dialysis method. The series of insulin-HGC formulations were prepared with different feed weight ratio of insulin to HGC from 0.5:1 to 4:1. The loading contents of insulin and size distribution of insulin-HGCs were characterized, and blood glucose responses were investigated in streptozotocin-induced diabetic rats after single subcutaneous injection of regular insulin and insulin-HGCs. The highest loading efficiency and content were obtained in insulin-HGC when a 1:1 feed weight ratio of insulin to HGC was employed. The hydrodynamic diameter of insulin-HGC nanoparticles were in the range of 200 to 500 nm with narrow size distribution. Insulin-HGC effectively sustained insulin release up to 40% within 12 hours followed by a slower controlled release. Insulin-HGC showed an extended blood glucose lowering effect up to 24 h and provided normal blood glucose levels after oral glucose (1.5 g/kg) load at 24 hours post-injection while regular insulin showed severe hypoglycemia. The prolonged time action profiles and low variability of insulin-HGC formulation resulted in improved blood glucose control in diabetic rats and fulfilled a pattern desirable of a basal insulin.