Poly[aniline‐co‐N‐(2‐hydroxyethyl) aniline] was synthesized in an aqueous hydrochloric acid medium with a determined feed ratio by chemical oxidative polymerization. This polymer was used as a functional conducting polymer intermediate because of its side‐group reactivity. To synthesize the alkyl‐substituted copolymer, the initial copolymer was reacted with NaH to obtain the N‐ and O‐anionic copolymer after the reaction with octadecyl bromide to prepare the octadecyl‐substituted polymer. The microstructure of the obtained polymers was characterized by Fourier transform infrared spectroscopy, ¹H‐NMR, and X‐ray diffraction. The thermal behavior of the polymers was investigated by thermogravimetric analysis and differential scanning calorimetry. The morphology of obtained copolymers was studied by scanning electron microscopy. The cyclic voltammetry investigation showed the electroactivity of poly [aniline‐co‐N‐(2‐hydroxyethyl) aniline] and N and O‐alkylated poly[aniline‐co‐N‐(2‐hydroxyethyl) aniline]. The conductivities of the polymers were 5 × 10⁻⁵ S/cm for poly[aniline‐co‐N‐(2‐hydroxyethyl) aniline] and 5 ×10⁻⁷ S/cm for the octadecyl‐substituted copolymer. The conductivity measurements were performed with a four‐point probe method. The solubility of the initial copolymer in common organic solvents such as N‐methyl‐2‐pyrrolidone and dimethylformamide was greater than polyaniline. The alkylated copolymer was mainly soluble in nonpolar solvents such as n‐hexane and cyclohexane. © 2011 Wiley Periodicals, Inc. J Appl Polym Sci, 2012