Water-swollen hydrogels characterized by hydrophobic microdomains within an aqueous polymer network have been prepared and investigated. The microdomains consist of comicelles of sodium dodecyl sulfate (SDS) and alkyl grafts from a hydrophobically modified water-soluble polymer and form at concentrations below the critical micelle concentration of the surfactant alone. These aggregates behave like pseudo-cross-links, bridging together many polymer molecules to form a viscoelastic network. The comicelles have the ability to solubilize water-insoluble dyes; hence, these materials may be of use in separations and controlled release processes.