In this study, poly(N-isopropylacrylamide)(PNIPAAm) was selectively grafted onto chitosan to form a copolymer hydrogel. To accomplish this goal, the amino group of chitosan (CS) was protected by reaction with phthalic anhydride, which also rendered the modified chitosan soluble in organic solvent. The N-phthaloyl chitosan was then reacted with glycidyl methacrylate (GMA) selectively through hydroxyl groups in glucopyranose rings, to provide vinyl functional groups for further graft copolymerization with NIPAAm monomer by free radical polymerization. The phthaloyl groups were removed under the reaction with hydrazine solution. Structures of the intermediates and final CS-g-PNIPAAm copolymer products were analyzed by Fourier transform infrared spectrometer and nuclear magnetic resonance. Several properties such as swelling behavior, thermal properties and cell compatibility of the formed chitosan-g-PNIPAAm copolymers were evaluated.