The aim of the present study was to fabricate chemically crosslinked matrix system of polyvinylpyrrolidone (PVP)-co-poly 2-acrylamido-2-methylpropane sulphonic acid (AMPS) through a free radical copolymerization method for controlled delivery of acyclovir HCl. PVP (polymer) has been chemically crosslinked with AMPS (monomer) by ethylene glycol dimethacrylate as a crosslinker in the presence of ammonium peroxodisulphate/sodium hydrogen sulphite as initiator. PVP-based hydrogel was developed by using different ratios of polymer, monomer and crosslinker, while acyclovir HCl was incorporated as model drug. FTIR, TGA, DSC, SEM, XRD and sol-gel fraction analysis were performed for the characterization and structural analysis of polymeric system. In order to study the pH responsive behaviour of hydrogels, swelling and drug release studies were carried out at both acidic (1.2) and basic pH (6.8). An effect of increasing content of polymer, monomer and crosslinker on swelling and in vitro drug release behaviour of PVP-co-poly (AMPS) was also evaluated. FTIR, TGA, DSC, SEM and XRD revealed the successful grafting of components as well as formation of thermodynamically stable hydrogels. Swelling studies showed high swelling at pH 6.8 as compared to pH 1.2, which confirmed the pH-sensitive behaviour of formulated hydrogels. PVP-based hydrogels exhibited high swelling with increased concentration of monomer, while swelling decreased with a high content of polymer and crosslinker. Drug release studies were found to be swelling controlled. Gel contents increased with an increase in the concentration of polymer, monomer and crosslinker. Drug release kinetics confirmed the controlled release pattern of model drug in developed crosslinked polymeric network. Biocompatibility and cytotoxicity of fabricated hydrogels were evaluated by performing a toxicity study on rabbits. The results revealed that fabricated hydrogels were biocompatible and non-toxic.