A systematic study based on the size reduction of chitosan particles has been conducted by de-acetylation by using various concentrations of NaOH solutions at different reaction temperature and time. The degree of de-acetylation (DD) of the isolated chitosan particles has been correlated with their molecular weight and ash content. It was found that degree of de-acetylation of the samples increased with increase in concentration of alkali and reaction temperature. The scanning electron micrographs showed that the particle size of chitosan decreases with a reduction in molecular weight. The observed size of particles with lowest molecular weight was in the range of 200–450 nm. The crystallinity and thermal stability of the particles were studied by using XRD and TGA respectively. The results showed that crystalline properties of the de-acetylated chitosan particles were increased with increase in concentration of NaOH and degree of de-acetylation. The particles prepared at 170°C have been found maximum thermal stability. The antimicrobial activity of the chitosan particles has been also studied with Escherichia coli, and the inhibitory zone diameters against the bacteria were found to increase with the degree of de-acetylation.