Chitosan (CS) and polyurethane-chitosan (PU-CS) nano-particles (NPs) were prepared for the core formation by complex coacervation method whereas alginate (ALG) and PU-ALG were crosslinked by ionic gelation method to form the protective shell-layer over the core. Effects of PU incorporation either within the core or shell or both were investigated by different in vitro and in vivo parameters. Fourier transform infrared (FTIR) spectroscopy of different compositions of nano-particles showed distinct characteristic peaks for CS, PU, and ALG, indicating their presence in variable ratios. Significance of polyurethane-incorporated systems towards insulin encapsulation efficiency, swelling parameters, insulin release, and in vivo pharmacological effect were also studied. Particle sizes, zeta potential, morphological analysis, mucoadhesion study, and in vivo acute toxicity studies of these core–shell nano-particles were also performed. Bioavailability of insulin ranged from 9.04% to 11.6% for polyurethane-incorporated chitosan-alginate core–shell nano-particle formulations which was significantly higher than the insulin bioavailability of basic CS/ALG core–shell nano-particle system. © 2018 Wiley Periodicals, Inc. J. Appl. Polym. Sci. 2018, 135, 46365. © 2018 Wiley Periodicals, Inc.