Chitosan is biocompatible polymer obtained from chitin, the building component of the crustacean shells. In this paper we make an attempt to review the current state of knowledge on some biological effects of chitosan in comparison with those of cationically modified chitosan, N-(2-hydroxypropyl)-3-trimethylammonium chitosan chloride (HTCC) that was recently synthetized by us by covalent attachment of glycidyltrimethylammonium chloride (GTMAC). Biological effects of HTCC and non-modified polymer are very similar. However, HTCC shows some unique beneficial properties which have not been found in its non-modified counterpart. One such example is that HTCC has the ability to bind heparin at physiological pH. HTCC having the degree of substitution almost 63.6% is easily absorbed within 1 hour after oral administration as found in C57BL/6j mice using FITC-labeled polymer. HTCC is distributed to lung, heart, and kidneys. HTCC stimulates and enhances blood platelet aggregation and decreases erythrocyte deformability (RBC). Moreover, HTCC seems to decrease both plasma total cholesterol level and LDL-cholesterol level in apoE-knockout mice fed with a diet containing HTCC. HTCC possibly down-regulates the HMG-CoAR mRNA level after 24 hour incubation with HepG2 cells in vitro.