Stearic acid (SA) grafted chitosan oligosaccharide (CSO) (CSO-SA), which was synthesized by an 1-ethyl-3-(3-dimethylaminopropyl)carbodiimide (EDC)-mediated coupling reaction, was demonstrated to form micelle like structure by self-aggregation in aqueous solution. The critical micelle concentration (CMC) of CSO-SA with 15.4% amino substituted degree of CSO was about 0.035 mg/ml. The micelles with 1mg/ml CSO-SA concentration had 70.6 nm volume average hydrodynamic diameter with a narrow size distribution and 46.4+/-0.1 mV surface potential. Due to the cationic property, the micelles could compact the plasmid DNA to form micelle/DNA complexes nanoparticles, which can efficiently protect the condensed DNA from enzymatic degradation by DNase I. The volume average hydrodynamic diameter of CSO-SA micelle/DNA complex increased from 203 nm to 318 nm and decreased to 102 nm due to the variation of zeta potential when the N/P ratio increased from 0.25 to 3.6 and from 3.6 to 58. The IC(50) value of the CSO-SA micelle against A549 cells was 543.16 microg/ml, while the IC(50) of Lipofectamine 2000 was about 6 microg/ml. The in vitro transfection efficiency of CSO-SA micelles was investigated by using plasmid DNA (pEGFP-C1). The transfection efficiency with CSO-SA/DNA (N/P ratio is 29) was increased with the post-transfection time (in 76h), while the optimal transfection of Lipofectamine 2000/DNA was obtained at 24h. The transfection of CSO-SA was not interfered in the presence of 10% fetal bovine serum, which showed remarkable enhancement effect. The optimal transfection efficiency of CSO-SA micelles in A549 cells was about 15%, which was higher than that of CSO (about 2%) and approach to that of Lipofectamine 2000 (about 20%). The low cytotoxic biodegradable CSO-SA micelles could be used as an effective DNA condensation carrier for gene delivery system.