A family of injectable, biodegradable and thermosensitive co-polymer nanoparticle (NP) hydrogels based on mPEG-b-POA-b-mPEG, which was synthesized from mono-methoxy poly(ethylene glycol) (mPEG) and poly(octadecanedioic anhydride) (POA), was investigated in this paper. It was found that the aqueous dispersions of these NPs underwent a reversible gel-sol transition upon temperature change. By using paclitaxel and Bovine serum albumin (BSA) as model drugs, we noticed that the in vitro releases of both in situ gel-forming formulations were sustained and no initial burst releases were observed for 7 days. In vitro cytotoxicity tests via MTT assay indicate that mPEG-b-POA-b-mPEG NPs are non-toxic to normal mouse lung fibroblast cells (L929). The in vivo hydrogel formation and in vivo biocompatibility of co-polymer NP hydrogel were also investigated and the results further validate the biocompatible nature of co-polymer NP hydrogel. In conclusion, our mPEG-b-POA-b-mPEG NP hydrogel is able to control the release of incorporated drug for longer duration.