Water-soluble chitosan (WCS) with five different molecular weights was synthesized by N-acetylation of chitosan with acetic anhydride. Degree of deacetylation of sample was determined by potentiometric titration. The structure of WCS was characterized by FTIR, XRD, and gel permeation chromatography. The critical aggregation concentration (cac) of self-aggregation was determined by measuring the fluorescence intensity of pyrene as a fluorescent probe and the surface tension. With the decrease of weight-average molecular weight (M(w)), the cac values of WCSs in aqueous media were 0.48, 0.41, 0.35, 0.16, and 0.06 mg/mL, respectively. The surface tension-concentration plots of WCS5 had more than one turning point. It showed WCS had tendency to form monomolecular micelles in the very dilute solutions. In addition, WCSs were evaluated for efficacy of nanoparticle formation, which can solubilize and carry thymol, a water-insoluble antimicrobial agent. The diameter and morphology of thymol-loaded WCS nanoparticles were characterized by Zeta size nano series and TEM. Mean diameters of these thymol-loaded WCS nanoparticles in aqueous media were 189, 167, 134, 35, and 21 nm, respectively. TEM photographs exhibited the thymol-loaded WCS nanoparticle as a bimolecular micelle. Furthermore, thymol-loaded WCS nanoparticles had stronger antibacterial activity than thymol. With the decrease of the size, the thymol-loaded nanoparticles showed a stronger antimicrobial effect on gram-positive bacteria and fungi. The minimum inhibitory concentration value of thymol-loaded WCS5 nanoparticle against Staphyococcus aureus and Bacillus subtilis was 0.00313-0.00157% (w/v).