Novel functional polymers utilizing specific host/guest interactions were designed by introducing a-CD host molecules into poly(epsilon-lysine) chains as side groups. An interesting phase separation was observed as a result of the inclusion complexation between the polymeric host and 3-(trimethylsilyl)propionic acid as a model guest in a aqueous media. This water-soluble polymeric host would be useful for various applications, particularly drug deliver, due to its biodegradability, low toxicity, and unique functionality represented as a complexation-induced phase separation.