The present research work entails synthesis and pharmacological screening of chemically modified N-aryl chitosan derivatives. Chitosan is an amino polysaccharide obtained from natural origin and it has attracted attention because of its unique physicochemical characteristics and biological activities. It has great pharmaceutical futuristic potential with unusual extent of possibilities for structural modifications to impart desired functions. This chemically modified chitosan can be used as potent hypocholesterolemic agent. Various aldehydes can be used for the chemical modification of chitosan, where aldehyde attached to the free amino group of chitosan polymer imparts different physicochemical properties, not exhibited before modification. An imine formation as an intermediate is then reduced to N-aryl derivative of chitosan. It was characterised by IR and NMR. The hypocholesterolemic mechanism of chitosan was investigated in male wistar rats. Animals were divided into 6 groups (n = 6): a normal untreated control group (UC), a high-fat control group (PC), one standard control (SC) and 3 modified chitosan groups (CSA1, CSA2 and CSA3). The doses of standard chitosan and modified chitosan were given at the beginning for 12 days. Later it was preceded by high fat induction. The results showed marked decrease in total serum cholesterol of rat’s in-vivo that refers to modified chitosan treatment.