Hydrogel formation triggered by a change in temperature is an attractive mechanism for in situ gelling biomaterials for pharmaceutical applications such as the delivery of therapeutic proteins. In this study, hydrogels were prepared from ABA triblock polymers having thermosensitive poly(N-(2-hydroxypropyl) methacrylamide lactate) flanking A-blocks and hydrophilic poly(ethylene glycol) B-blocks. Polymers with fixed length A blocks (~22 kDA) but differing PEG-midblock lengths (2, 4 and 10 kDa) were synthesized and dissolved in water with dilute fluorescein isothiocyanate (FITC)-labeled dextrans (70 and 500 kDA). Hydrogels encapsulating the dextrans were formed by raising the temperature. Fluorescence recovery after photobleaching (FRAP) studies showed that diffusion coefficients and mobile fractions of the dextran dyes decreased upon elevating temperatures above 25 °C. Confocal laser scanning microscopy and cryo-SEM demonstrated that hydrogel structure depended on PEG block length. Phase separation into polymer-rich and water-rich domains occurred to a larger extent for polymers with small PEG blocks compared to polymers with a larger PEG block. By changing the PEG block length and thereby the hydrogel structure, mobility of FITC-dextran could be tailored. At physiological pH the hydrogels degraded over time by ester hydrolysis, resulting in increased mobility of the encapsulated dye. Since diffusion can be controlled according to polymer design and concentration, plus temperature, these biocompatible hydrogels are attractive as potential in situ gelling biodegradable materials for macromolecular drug delivery.