Polyethylenimine (750 kDa) has been derivatized to influence the proton sponge mechanism and hydrophobic-hydrophilic balance. The polymer was acylated using acid anhydrides of varying carbon chain length, followed by cross-linking with PEG-bis-P to form compact nanoparticles. The chemical linkages in the particles were characterized by FTIR and NMR spectroscopy. The hydrodynamic diameter of nanoparticles was found to be in the range of 83.5-124 nm. AFM imaging of native and DNA-loaded nanoparticles revealed highly compact and spherical shape. The positive surface charge on particles decreased with the increase in percentage of acylation and also on complexing with DNA. The buffering capacity of PEI was reduced considerably on preparing acylated nanoparticles. The nanoparticles formed stable complexes with DNA and higher weight ratios were required for formation of electro-neutral complexes. Further, these nanoparticles were investigated for their gene delivery efficacy on COS-1 cells. It was found that acylated PEI nanoparticles were 5-12-fold more efficient transfecting agents as compared to native PEI (750 kDa) and commercially available transfecting agent lipofectin. The MTT colorimetric assay revealed of considerable reduction in toxicity of acylated PEI nanoparticles as compared PEI. Of all the systems prepared, nanoparticles with 30% acylation using propionic anhydride were found to be the most efficient in in vitro transfection.