The polymerization of oil-in-water ternary microemulsions containing water, styrene, and vinylbenzyldodecyldimethylammonium chloride (VDAC) was investigated. VDAC has a polymerizable vinylbenzyl group in the hydrophilic head. Stable transparent microemulsions were prepared by the solubilization of styrene monomer without addition of any cosurfactant. Polymerization of the microemulsions using an oil-soluble free radical initiator leads to either a transparent latex suspension or a hydrogel, depending on the composition. The transparent hydrogels contain up to 92 wt % water and exhibit a reversible gel-to-sol transition on increasing temperature. The hydrogels can be diluted with water to form a clear solution above the gel-to-sol transition. The polymer structure was analyzed using NMR and Fourier transform infrared spectroscopy. Dynamic light scattering was used to measure nanoparticle size, while dynamic rheological experiments were performed to characterize the structure of the hydrogels.