Fully hydrophobic acylated chitosan was prepared and characterized by elemental analysis, FTIR and 1HNMR. The effects of reaction conditions on the average acylation degree of chitosan were investigated. The results showed that in the pyridine-chloroform (2∶1) medium, the highest acylation degree could be obtained using the lowest molecular chitosan. The amphiphilic N,N-diacylated chitosan could be gained by selective reduction of fully acylated chitosan.