The preparation of water-soluble chitosan (WSC) with various molecular weights by gamma Co-60 irradiation of chitosan solution (5%) in the presence of hydrogen peroxide (1%) combined with acetylated reaction was carried out. The average molecular weight (Mw) of chitosan was measured by gel permeation chromatography (GPC). The chemical structure and the crystallinity of chitosan and WSC were characterized by Fourier-transform infrared (FT-IR) spectroscopy and X-ray diffraction (XRD), respectively. The antioxidant activity of WSC and chitosan was investigated using the free radical 2,2′-azino-bis (3-ethylbenzothiazoline-6-sulphonic acid) (ABTS•+). Obtained results showed that chitosan with Mw of 18–90 kDa could be efficiently prepared by this technique in the dose range from 10 to 24.5 kGy. After the acetylated process, the resulting WSC possesses good solubility in a wide pH level of 2–12, and WSC with low molecular weight exhibited significantly higher antioxidant activity than the one with high molecular weight. In detail, the antioxidant activity was 14.7%, 70.5%, 84.2%, 89.4%, and 97.5% for WSC samples prepared from chitosan with Mw of 140.2 kDa, 91.4 kDa, 51.2 kDa, 35.3 kDa, and 18.1 kDa, respectively, at the same reaction time of 90 min. Moreover, the antioxidant activity of WSC was higher than that of chitosan. Thus, WSC prepared by gamma Co-60 irradiation and acetylated process can be potentially applied as a natural antioxidant agent.