Alginate modified with hydrophobic groups was synthesized by an amide coupling reaction with alkyl amine (C8) at low pH. At or above critical concentration, HMA forms a physical gel in aqueous media. Unreacted guluronic units of alginate can be further crosslinked with divalent cations, such as Ca2+. Uniform gels were obtained by slow release of calcium ions from calcium-ethylene diamine tetra acetic acid complex with the addition of D-glucono-d-lactone. Interplay of the two different gelation mechanisms, hydrophobic association and chemical crosslinking, enables us to tune the mechanical properties of the system. Solubility of lipophilic drugs can be improved comparatively due to preferential uptake of the drugs by micelles formed by hydrophobic moiety. Better release rates can be expected due to stronger crosslinked alginate units surrounding the hydrophobic rich domains. Small angle scattering analysis will be presented along with rheological data to determine the structure-property relationship of the resultant gels. These experiments will be compared with semi-interpenetrating polymer network of alginate and hydrophobically modified ethyl hydroxyl ethyl cellulose for possible biomedical applications