A novel cationic starch derivative was prepared by esterifying native potato starch with anhydrous betaine. The reaction was performed on native potato starch using betainyl chloride in refluxing 1,4-dioxane with pyridine as a nucleophilic catalyst. The product was characterized spectrometrically and its molecular weight distribution was determined. Additionally, the applicability of starch betainate for paper manufacturing was studied. The product is considered to be environmentally more friendly than the traditional cationic starch ethers currently in commercial use as it consists solely of natural and biodegradable products.