A chitosan derivative as an acetate salt was successfully prepared by using a spray drying technique. Physicochemical characteristics and micromeritic properties of spray-dried chitosan acetate (SD-CSA) were studied as well as drug-polymer and excipient-polymer interaction. SD-CSA was spherical agglomerates with rough surface and less than 75 microm in diameter. The salt was an amorphous solid with slight to moderate hygroscopicity. The results of Fourier transform infrared (FTIR) and solid-state (13)C NMR spectroscopy demonstrated the functional groups of an acetate salt in its molecular structure. DSC and TGA thermograms of SD-CSA as well as FTIR and NMR spectrum of the salt, heated at 120 degrees C for 12 h, revealed the evidence of the conversion of chitosan acetate molecular structure to N-acetylglucosamine at higher temperature. No interaction of SD-CSA with either drugs (salicylic acid and theophylline) or selected pharmaceutical excipients were observed in the study using DSC method. As a wet granulation binder, SD-CSA gave theophylline granules with good flowability (according to the value of angle of repose, Carr's index, and Hausner ratio) and an excellent compressibility profile comparable to a pharmaceutical binder, PVP K30. In vitro release study of theophylline from the tablets containing 3% w/w SD-CSA as a binder demonstrated sustained drug release in all media. Cumulative drug released in 0.1 N HCl, pH 6.8 phosphate buffer and distilled water was nearly 100% within 6, 16 and 24 h, respectively. It was suggested that the simple incorporation of spray-dried chitosan acetate as a tablet binder could give rise to controlled drug delivery systems exhibiting sustained drug release.