Abstract: The present invention provides a pH sensitive nanoparticulate delivery system for the administration of peptide hormones and drugs. In particular it provides a pH sensitive nanoparticulate for oral insulin administration. The nanoparticles developed by this process are fatty acid nanoparticles and a polymer is used as a stabilizer and also to incorporate pH sensitivity so that these particles shrink in the gastric acidic pH thereby protecting the incorporated insulin. These particles being also hydrophobic in nature and by virtue of their small size get absorbed through the intestinal cell wall and Peyer's patches. These nanoparticles are novel and unique in the sense that polymer content is only 0.03-0.06 g/g product and the polymer is hydrophilic in nature.