This paper deals with the characterization of a new microparticulate hydrogel obtained by gamma irradiation of alpha, beta-poly[N-(2-hydroxyethyl)-DL-aspartamide] (PHEA). When enzymatic digestion of PHEA hydrogel was evaluated using various concentrations of pepsin and alpha-chymotrypsin no degradation occurred within 24 h. In-vivo studies showed that this new material is biocompatible after oral administration to rats. PHEA hydrogel was also studied as a system for delivery of diflunisal, an anti-inflammatory drug. In-vitro release studies in simulated gastrointestinal juice (pH 1 or 6.8) showed that most of the drug was released at pH 6.8. In-vivo studies indicated that diflunisal-loaded PHEA microparticles significantly improved the gastric tolerance and oral bioavailability of the drug in comparison with free diflunisal. These results suggest the potential application of PHEA hydrogel as a new delivery system for the oral administration of anti-inflammatory drugs.