A novel self-assembling poly(ethylene glycol) hydrogel system based on inclusion complexes between beta-cyclodextrin (beta-CD) and cholesterol is described. Hydrogels are formed after hydration of a mixture of star-shaped 8-arm poly(ethylene glycol) (PEG) end-modified with beta-CD groups and the same star-shaped PEG end-modified with cholesterol moieties. Rheological analysis as well as 2D-NMR spectroscopy demonstrated that the obtained gels are due to formation of beta-CD/cholesterol inclusion complexes. As also observed by rheology, the hydrogels are fully thermoreversible upon repetitive heating and cooling steps. Hydrogel properties were dependent on polymer concentration, the beta-CD/cholesterol stoichiometry, and the molecular weight of the starshaped PEG. Because of their assumed biocompatibility and expected physiological clearance, hydrogels based on star-shaped PEG and beta-CD/cholesterol inclusion complexes offer excellent opportunities as drug delivery matrices and for other pharmaceutical and biomedical applications.