Chitosan, a natural biopolymer, is used for drug delivery application. But its potential application is limited by its low solubility in aqueous media. The present study was designed to prepare carboxymethyl chitosan (CMC), a water soluble derivative of chitosan, and evaluate the prospective of crosslinked CMC-Montmorillonite (MMT) nanoparticles for controlled delivery of isoniazid. The nanoparticles were characterized by Fourier Transmission Infrared Spectroscopy (FTIR), Nuclear Magnetic Resonance (NMR), X-ray diffraction (XRD), scanning electron microscopy (SEM), and Transmission emission microscopy (TEM). The effects of MMT and glutaraldehyde on nanoparticles were assessed with regard to encapsulation efficiency, percentage swelling degree, and cumulative release. Percentage swelling degree and cumulative release were studied in pH medium 1.2 and 7.4 for 6 h. The cumulative release was studied by UV-visible spectrophotometer. Cell viability study was performed by MTT assay analysis. FTIR and NMR study indicated the successful preparation of CMC. FTIR study confirmed the interaction of MMT with CMC. The exfoliation of MMT layers and molecular level dispersion of isoniazid in CMC was examined by XRD and TEM. SEM study showed that the surface of the CMC-MMT nanoparticles was smooth compared with those of CMC nanoparticles. Swelling and release of isoniazid from the nanoparticles increased with the decrease in the MMT and glutaraldehyde content. The percentage swelling degree and cumulative release was more in pH 1.2. Cell viability study revealed that CMC was not cytotoxic, and the nanoparticles containing MMT was less cytotoxic than those of MMT free nanoparticles. CMC-MMT nanoparticles can be exploited as potential drug carrier for controlled release applications.