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Hydroxyethyl chitosan （HE-chitosan） is a water-soluble derivative of chitosan with many apparent biological properties. For example, it is non-toxic and rapidly biodegradable. Moreover, HE-chitosan has advantages in water-solubility, moisture retention and gelling property due to its hydroxyethyl group. However, the biocompatibility and biodegradability of this multifimctional de- rivative have rarely been documented although they are critical for its application in biomedical and clinical treatments. The purpose of this work was to evaluate the biosafety of HE-chitosan, and draw important clues for its diverse applications. HE-chitosan was synthesized and characterized its chemical structure with FTIR. Its molecular weight （Mw） was determined by gel permeation chro- matography （GPC）, and its deacetylation degree （DD） was investigated through potentiometric analysis. The cytotoxicity of HE-chitosan on mouse fibroblast cell L929 was tested. The biocompatibility and biodegradability of HE-chitosan in rat and rabbit were evaluated. The FTIR results indicated that the hydroxyethyl groups were linked to C6 of chitosan. The GPC analysis confirmed that its Mw was about 90.01 kDa. It was also demonstrated that HE-chitosan had excellent biocompatibility and biodegradability in vivo and had no cytotoxicity on L929. These findings indicated that HE-chitosan can potentially be applied as a biomaterial in tissue engineering, drug delivery, and other biomedical fields.