Controlled release of hydrophilic and hydrophobic small molecules (vitamin B 12 and progesterone) as well as insulin and interferon was investigated for a terpolymer hydrogel network containing the thermosensitive monomer, N-isopropyl acrylamide (NiPAAM), sodium acrylate and the hydrophobic co-monomer, n- N-alkylacrylamide. A new, micellar-based polymerization method was used to fabricate mechanically robust NiPAAm hydrogels containing small amounts of the other two co-monomers. Drugs and proteins were entrapped directly from aqueous dispersions containing all of the network components stabilized in micelles. Hydrophobic alkyl chain incorporation in these networks influenced NiPAAm gel swelling, gel critical behavior with temperature and drug release kinetics. Increasing gel hydrophobicity imparted by longer alkyl acrylamide chain length and/or increasing alkyl acrylamide content shifted the gel thermal phase transition to lower temperatures and decreased gel swelling. Acrylamide chain-length dependent drug release was also modified over that for gels containing no alkyl co-monomer. Release of insulin and interferon was prolonged over weeks, displaying a zero-order release profile when entrapped (loaded) by in situ network polymerization compared to identical gel rapid release when loaded by usual sorption methods. Hydrophobic micro-structures resulting from micellar stabilized n-alkyl acrylamide monomer clusters in the swelling gels are implicated in creating this release profile.