A series of hydroxybutyl chitosans (HBCSs) with a degree of substitution (DS) ranging from 0.38 to 1.54 were homogeneously synthesized in KOH/LiOH/urea aqueous solutions under ambient conditions. The structure and solution properties of HBCSs were characterized by FT-IR, NMR, SEC-LLS, UV-vis, rheological and DLS measurements. The amino groups at C2 and hydroxyl groups at C3 and C6 participated in the reaction, although substitution mainly occurred at the hydroxyl groups at C6. The HBCSs exhibited good solubility in aqueous solutions, and those with a DS above 1.25 displayed phase separation behavior and precipitated out from solution when heated to a critical temperature. All results confirmed the hypothesis that the homogeneous KOH/LiOH/urea aqueous solution is a stable, mild, and energy-saving reaction medium for preparing HBCSs. Moreover, the HBCSs exhibited excellent biocompatibility, and even promoted the proliferation of normal cells. They also displayed antibacterial activities against Staphylococcus aureus and Escherichia coli, thus being suitable for biomedical applications.