Localized drug delivery is emerging as an effective technique due to its ability to administer therapeutic concentrations and controlled release of drugs to cancer sites in the body. It also prevents the contact of harsh chemotherapy drugs to healthy regions in the body that otherwise would become exposed to current treatments. In this project, we have developed a model drug delivery system consisting of non-ionic surfactant vesicles (niosomes) packaged within a biodegradable, temperature and pH sensitive hydrogel network. Our first step has been to characterize the behavior of the noisomes when exposed to environments that mimic body fluids. Characteristics such as diffusion and mass transfer of 5,6-Carboxyfluorescein, which is a dye with similar physical properties as therapeutic drugs for cancer, is used to determine release rate from the niosomes. Depending on the conditions to which individual niosomes are exposed, the release rate can be controlled to last from 24 hours to more than 144 hours. The hydrogel provides another layer of control and a stable environment for the niosomes. For this we used a cross linked hydrogel (chitosan) network into which the niosomes were embedded. The niosome-hydrogel system, which is a liquid at room temperature, starts gelling once inside the body. In- vitro release rate studies proved that drugs continued to be released appreciably even after 3 months of the experiment. One of the systems that we are targeting with this study is intraperitonial cavities after ovarian cancer is discovered and removed to increase the life span of patients. Single administration rates have been tested and compared to local delivery via an external catheter. We found that our system lasted longer than catheter administration leading to less frequent administration and also resulted in reduced toxicity. Our results will help in the development of a low cost and improved method for drug delivery with application to intracavitary ovarian cancer treatment and other cancer types.