Abstract The effects of the molecular weight (MW) and degree of deacetylation (DD) of chitosan on chitosan hydrogel beads were characterized, and the entrapment efficiency, release of entrapped lipase, and activity of immobilized Candida rugosa lipase were investigated. Fresh and freeze-dried beads were characterized. A solution of lipase was prepared in a 1.5% (w/v) chitosan and 1% (v/v) acetic acid medium, and then dropped into a tripolyphosphate solution to prepare the beads. The release studies were performed over 36 h. The enzyme activity was assayed using the Sigma lipase activity method. Chitosan with high MW and DD resulted in a higher loading. A lower activity was observed for beads produced with high DD chitosan. MW did not have a marked effect on the activity. The release study revealed that enzyme release increased to a maximum when the bead was manufactured with a low MW and a moderate to high DD chitosan sample. Freeze drying did not affect the release or the activity of the lipase. Chitosan with a high MW and DD can thus improve loading and reduce the release of lipase in these beads. The choice of chitosan can affect the activity normalized for lipase loading, and beads with desirable qualities can be produced.