Chitosan has been widely used as an excipient in the pharmaceutical industries, due to its biodegradable, biocompatible, low toxicity, and mucoadhesive properties. Chitosan nanoparticles have been extensively investigated for delivery of drugs, herbal products, proteins or peptides and genes. The particle size of chitosan nanoparticles has an important effect on their properties in its pharmaceutical application. Smaller particle size can entrap higher concentration of therapeutic agents, improve drug stability and its bioavailability, and provide sustained delivery. Although diverse efforts have been made to obtain the chitosan nanoparticles and its potential pharmaceutical applications, optimization of the fabricating conditions and the comprehensive properties of the resultant chitosan nanoparticles is still an ongoing important study subject. In this review, we will describe several factors that affect chitosan nanoparticle formation specifically in ionic gelation method, such as chitosan characteristic, i.e. degree of deacetylation, molecular weight, and the ratio of chitosan-crosslinker, type and concentration of crosslinker, mixing procedure, and condition. We will also give an overview of the characterization process of the chitosan nanoparticles.