Copolymer hydrogels were prepared upon gamma-ray-induced polymerization of aqueous micellar solutions containing N-isopropylaerylamide (NiPAAm) and the surfactant monomer (surfmer) omega-methoxy poly(ethylene oxide)(40)undecyl-alpha-methacrylate (PEO-R-MA-40). Stable, transparent, and thermosensitive hydrogels were obtained in a one-step process. Dose versus conversion measurements showed a complete conversion of comonomer solutions to hydrogels. The size of the surfmer micelles prior and subsequent to polymerization was studied using SAXS measurements. Presence of NiPAAm in the aqueous phase did not influence the size of the PEO-R-MA-40 micelles. During the polymerization process the particle diameter decreased from 7.0 to 5.6 nm probably due to cross-linking in the shell of the micelles. The thermosensitive behavior of the copolymer gels was investigated. The lower critical solution temperature (LCST) of the surfmer-containing gels was higher than for pure poly-NiPAAm (P-NiPAAm) gels, the increase being a direct function of the surfmer concentration. For hydrogels containing small amounts of surfmer, the shrinking at temperatures above the LCST was increased, and the swelling behavior at temperatures below the LCST was slightly increased. The mechanical stability of the copolymer hydrogels was studied using elongational deformation measurements. Presence of surfmer increased the mechanical stability of the hydrogels, the true stress at break being clearly higher for the copolymer gels compared with pure P-NiPAAm gels. A hydrogel containing only 1% (w/w) of surfmer can be elongated up to a true stress being nearly twice as large as for the pure P-NiPAAm gel. This can be explained by the presence of copolymerized micellar aggregates acting as new, stable cross-linking units. A structure model correlating the mechanical properties with a possible network structure is presented.