Three- and four-armed star polymers with poly(ethylene oxide) arms capped with hydrophobic end-groups were synthesized from nonylphenoxypoly(ethylene glycol)s and well defined tri- and tetraisocyanates. The latter were hydrosilylation products of m-isopropenyl-alpha,alpha-dimethylbenzyl isocyanate (m-TMI). In aqueous solution the arm ends associate, and above a critical star concentration the mixture phase separates into a dilute phase and a condensed gel phase. Their respective polymer concentrations remain constant as long as the two phases coexist, their volume fractions being proportional to the total polymer concentration. Brookfield viscosity measurements confirm the formation of the gel phase which resembles an amphiphilic hydrogel. It exhibits a high affinity for hydrophobic compounds.