Hybrid agarose hydrogels embedded with pH-responsive diblock copolymers micelles were developed to achieve functional hydrogels capable of stimulus-triggered drug release. Specifically, a well-defined poly(ethylene oxide) (PEO)-based diblock copolymer, PEO-b-poly(2-(N,N-diisopropylamino)ethyl methacrylate) (PEO(113)-b-PDPAEMA(31), where the subscripts represent the degrees of polymerization of two blocks), was synthesized by atom transfer radical polymerization. PDPAEMA is a pH-responsive polymer with a pKa value of 6.3. The PEO(113)-b-PDPAEMA(31) micelles were formed by a solvent-switching method, and their pH-dependent dissociation behavior was investigated by dynamic light scattering and fluorescence spectroscopy. Both studies indicated that the micelles were completely disassembled at pH = 6.40. The biocompatibility of PEO(113)-b-PDPAEMA(31) micelles was demonstrated by in vitro primary cortical neural culture. Hybrid agarose hydrogels were made by cooling 1.0 wt % agarose solutions that contained various amounts of PEO(113)-b-PDPAEMA(31) micelles at either 2 or 4 °C. Rheological measurements showed that the mechanical properties of gels were not significantly adversely affected by the incorporation of diblock copolymer micelles with a concentration as high as 5.0 mg/g. Using Nile Red as a model hydrophobic drug, its incorporation into the core of diblock copolymer micelles was demonstrated. Characterized by fluorescent spectroscopy, the release of Nile Red from the hybrid hydrogel was shown to be controllable by pH due to the responsiveness of the block copolymer micelles. Based on the prominent use of agarose gels as scaffolds for cell transplantation for neural repair, the hybrid hydrogels embedded with stimuli-responsive block copolymer micelles could allow the controlled delivery of hydrophobic neuroprotective agents to improve survival of transplanted cells in tune with signals from the surrounding pathological environment.