Novel polyester-co-polyether dendrimers consisting of a hydrophilic core were synthesized by a combination of convergent and divergent syntheses. The core was synthesized from biocompatible moieties, butanetetracarboxylic acid and aspartic acid, and the dendrons from PEO (poly(ethylene oxide)), dihydroxybenzoic acid or gallic acid, and PEG monomethacrylate. The dendrimers, Den-1-(G 2) (second generation dendrimer-1) and Den-2-(G 2) (second generation dendrimer-2) consisting of 16 and 24 allyl surface groups, respectively, were obtained by coupling the dendrons to the core. The dendrimer (Den-1-(G 2)-OH) with hydroxyl groups at the surface was synthesized by oxidation of the allyl functional groups of Den-1-(G 2), which was divergently coupled to the dendrons to obtain the third generation dendrimer Den-1-(G 3) consisting of 32 surface groups. The modifications in surface groups and generation of dendrimers were shown to influence the shape of dendrimers in the AFM studies. The aggregation as well as self-assembly of dendrimers was observed at high concentration in water by light scattering studies; however, it was reduced on dilution and in the presence of sodium chloride. Dendrimers demonstrated good ability to encapsulate the guest molecule, with loading of 15.80 and 6.47% w/w for rhodamine and beta-carotene, respectively. UV spectroscopy proved the absence of any pi-pi complexation between the dendrimer and encapsulated compounds. (1)H NMR and FTIR studies showed that the physical entrapment and/or hydrogen bonding by PEO in the interior and branch of the dendrimer are the mechanisms of encapsulation. The release of the encapsulated compounds was found to be slow and sustained, suggesting that these dendrimers can serve as potential drug delivery vehicles.