To prepare chitosan-based polymeric amphiphiles that can form nanosized core-shell structures (nanoparticles) in aqueous milieu, chitosan oligosaccharides (COSs) were modified chemically with hydrophobic cholesterol groups. The physicochemical properties of the hydrophobized COSs (COSCs) were investigated by using dynamic light scattering and fluorescence spectroscopy. The feasibility of applying the COSCs to biomedical applications was investigated by introducing them into a gene delivery system. The COSCs formed nanosized self-aggregates in aqueous environments. Furthermore, the physicochemical properties of the COSC nanoparticles were closely related to the molecular weights of the COSs and the number of hydrophobic groups per COS chain. The critical aggregation concentration values decreased upon increasing the hydrophobicity of the COSCs. The COSCs efficiently condensed plasmid DNA into nanosized ion-complexes, in contrast to the effect of the unmodified COSs. An investigation of gene condensation, performed using a gel retardation assay, revealed that $COS6(M_n=6,040 Da)$ containing $5\%$ of cholesteryl chloroformate (COS6C5) formed a stable DNA complex at a COS6C5/DNA weight ratio of 2. In contrast, COS6, the unmodified COS, failed to form a stable COS/DNA complex even at an elevated weight ratio of 8. Furthermore, the COS6C5/DNA complex enhanced the in vitro transfection efficiency on Human embryonic kidney 293 cells by over 100 and 3 times those of COS6 and poly(L-lysine), respectively. Therefore, hydrophobized chitosan oligosaccharide can be considered as an efficient gene carrier for gene delivery systems.