Novel amphiphilic star-shaped block copolymer, star-poly(epsilon-caprolactone)-block-poly(N-(2-hydroxypropyl)methacrylamide), was synthesized and characterized. Star-block copolymers with varying feed ratios were prepared by free radical polymerization of N-(2-hydroxypropyl)methacrylamide in the presence of a novel biodegradable, macromolecular chain-transferring agent star-poly(6-caprolactone)-tetrakis-thiol. All star-block copolymers self-assembled in aqueous solutions to form unimodal micelles of 100-150nm size. Micelle size was independent of polymer concentration. The critical aggregation concentrations of the polymers were in the range of 1-2.5 mg/l. The partition equilibrium constant of pyrene in the hydrophobic core of micelles was comprised between 5 and 8 x 10(5). The starblock copolymer micelles were loaded by a dialysis procedure with 5-12% (w/w) of a model poorly water-soluble drug (indomethacin). These star-block copolymers could prove useful as nanocarriers for the solubilization and transport of hydrophobic drugs. Star-shaped macromolecular chain-transferring agent reported in this work can also find application in the synthesis of a variety of novel biodegradable star-block copolymers.