Localized delivery of drugs can provide better treatment for residual cancer tumors. Our research proposes a “package within a package” drug delivery system which results in an effective controlled release of the drug to the targeted site and also reduces its toxic effects to other parts of the body. The first part of the system is a non-ionic surfactant vesicle or niosome and the second a biodegradable and pH sensitive cross-linked hydrogel. The vesicle is prepared by hydration of amphiphillic films with a PBS buffer solution and a fluorescent marker, 5,6-carboxyfluorescein. We chose to encapsulate this particular marker to imitate and test the release rate of the chemotherapy drug from the vesicle interior. After hydration, the vesicles were extruded to constrict their size distribution. Un-entrapped dye was removed using ultracentrifugation and gel exclusion chromatography. The dye encapsulated vesicles were placed in a semi-permeable cellulose membrane and immersed in a solution of either PBS (a high ion solution) or milli-Q water (a low ion solution). The environment in the PBS solution would closely mimic the vesicle's behavior in the hydrogel and the water environment would closely follow that of in the body. Diffusion of the dye through the membrane was determined at different time intervals by using fluorescence spectroscopy and its release rate was determined. Using this methodology, we hope to provide a better treatment technique for drug delivery in cancer patients.