Poorly water soluble drugs often show low oral bioavailability due to their low dissolution rate. In the present study, cross-linked poly(vinyl alcohol) hydrogel microspheres were prepared. Nanocrystals of fenofibrate as a model of poorly water soluble drugs were dispersed within the poly(vinyl alcohol) hydrogel microspheres by swelling the microspheres with fenofibrate/methanol solution, followed by evaporation of the solvent methanol. The fenofibrate dissolution rate from the fenofibrate-loaded hydrogel microspheres in a medium simulating gastrointestinal tract conditions was much higher than the dissolution rate of free fenofibrate. And the dissolution assay also showed that fenofibrate released from the hydrogel in a sustained manner. In vivo pharmacokinetic study showed that the fenofibrate-loaded hydrogel microspheres showed much higher bioavailability compared with free fenofibrate, and similar bioavailability but longer half-lives and mean residence time and lower maximum plasma concentration compared with a marked fenofibrate formulation Lipanthyl® after oral administration in rats, indicating that the fenofibrate-loaded PVA hydrogel exhibited lower fluctuation in plasma drug concentration and more sustained release behavior.