Hepatocytes are reportedly susceptible to the injurious effects of oxidants when exposed to toxic substances such as Ethanol. The widespread claims of the medicinal efficacy of chitosan and chitosan nanoparticles have been well documented in literature. Characterization of chitosan and chitosan nanoparticles by FTIR spectroscopy and particle size, evaluate antioxidant properties and antimicrobial activity of chitosan samples. The in vitro antioxidant of samples were assayed by DPPH scavenging activity. The in vivo hepatoprotective effects evaluated in male Wister rats against ethanol induced liver damage in preventive and curative models. The chitosan and chitosan nanoparticles (200 mg/kg body weight (b.w), and silimarin (100 mg/kg b.w) were administered orally in both the studies. Liver injury was induced by 40% ethanol administration (3.76 gm/kg b.w, orally) for 30 days. Both chitosan and chitosan nanoparticles appeared antioxidant activity in DPPH scavenging activity assay, while the chitosan nanoparticles was the more effective one compared with chitosan. The level of plasma aspartate aminotransferase (AST), alanine aminotransferase (ALT), alkaline phosphatase (ALP) ,  GGT ,  bilirubin, albumin, globulin, total protein, total cholesterol, triglycerides, LDL-cholesterol, HDL-cholesterol and plasma antioxidant state (MDA content and catalase activity) were determined to assay hepatotoxicity. Ethanol administration caused severe hepatic damage in rats as evidenced by elevated plasma AST, ALT, GGT, bilirubin, total cholesterol, triglycerides, LDL-cholesterol and MDA content. The chitosan, chitosan nanoparticles and silimarin administration prevented the toxic effect of ethanol on the above plasma parameters in preventive model. The present study concludes that chitosan and chitosan nanoparticles have significant antioxidant and hepatoprotective activity against ethanol induced hepatotoxicity.