A new chitosan-poly(ethylene oxide) (PEO) hydrogel was fabricated and its physicochemical properties were evaluated for its potential applications in medical devices. Chitosan-linolate was synthesized by grafting linoleic acid via N-(3-diethylpropyl)-N'-ethylcarbodiimide chemistry to the amine groups in chitosan. Spontaneous formation of the chitosan-PEO gel was achieved by mixing the chitosan-linolate solution with a PEO-thiol solution using a Michael type addition reaction. The chemical properties of both chitosan-linolate polymer and chitosan-PEO hydrogel were analyzed by FTIR, NMR, and XPS. The physical properties of the hydrogel were evaluated by testing the rheological properties of the precursor solutions with a rheometer by measuring the degree of swelling and degradation of the chitosan-PEO hydrogel and by observing the dehydrated morphology by SEM. Although the rheological tests demonstrated a process of spontaneous formation of the chitosan-PEO hydrogel, measurements of gel swelling in either acidic or basic media and an observation of its morphology by SEM demonstrated its physical and morphological stabilization in water for more than 3 months. On the other hand, the chitosan-PEO hydrogel degraded quicker in a basic phosphate buffer medium than in either acid or neutral media.