Highly luminescent thiolated gold nanoclusters have been synthesized by “spatially confining” the Au­(I)-thiolate complexes in a biocompatible and biodegradable cationic polymer, chitosan, taking the form of a nanosized hydrogel. In this conformation, the strong electrostatic attraction between chitosan and thiolate ligands largely restricts the intramolecular motions of the surface ligands on the as-formed Au nanoclusters, leading to a significant enhancement of their luminescence when in this nanogel. The “spatial confinement” method can be further used to prepare nanogels impregnated with Au nanoclusters of different color and different thiolate ligands.