Various hormone replacement regimens and delivery systems have been developed; however, there is still a need for additional, easily controllable and biocompatible systems. We have developed and characterized biocompatible polycaprolactone-block-poly(ethylene oxide) (PCL-b-PEO) micelles for the delivery of 17beta-estradiol (E2) and investigated their loading and release properties using fluorescence spectroscopy. The micelles are spherical aggregates that range in size from 20 to 40 nm, as determined by both transmission electron microscopy and dynamic light scattering. A high loading efficiency for E2 of up to 96%, as well as a high drug loading capacity of up to 4000 molecules of E2 per micelle (equivalent to 190% (w/w)), is obtainable. In addition, the E2 loading and release can be controlled by modifying the block length of the polycaprolactone core and the initial estradiol concentration. The release of E2 from the micelles showed a biphasic profile under perfect sink conditions: there is an initial burst release, followed by a slow and prolonged release for up to 5 days, until complete release is achieved. The release of E2 from the micelles was shown to be diffusional, as shown by the linearity of the release as a function of the square root of time. Approximate diffusion coefficients of the order of 10(-17) cm2/s were obtained. In vitro and in vivo experiments confirmed that the biological activity of E2 was retained after preparation of the micelles. This micelle carrier could serve as a versatile and efficient nanodelivery system for steroids and other poorly water soluble drugs that require solubilizing agents for delivery.