Insulin was encapsulated in calcium alginate beads coated with chitosan. Its release from alginate-chitosan and alginate-chitosan-glutaraldehyde beads was studied in artificial gastric (pH 1.2) and intestinal (pH 7.5) fluids. By comparing the release amounts, the ionic interaction between alginate-chitosan matrix with the medium pH's, intestinal fluid was found to be the better. The degradation of released insulin was also searched, even after 6 h incubation, the beads remained stable and the undegraded insulin seemed to be sufficient for the physiological conditions. Consequently, it can be said that the system can be offered for oral delivery of the therapeutic peptide drug insulin.