Our group has been working on the development of subconjunctivally implantable hydrogels, composed of a thermo-responsive component, N-isopropyl acrylamide, and a hydrolytically degradable cross-linker, dextran-lactate-2-hydroxyethyl methacrylate, as potential periocular drug delivery systems. In our previous work, we demonstrated that insulin could be encapsulated into and be released from the hydrogels in vitro, and the released insulin was biologically active. The current work deals with assessment of biocompatibility and retinal physiology of the subconjunctivally implanted hydrogels in the retina. The hydrogels were implanted subconjunctivally in male Sprague Dawley rats that did not show any increased glial fibrillary acidic protein (GFAP)immunostaining, suggesting the designed blank hydrogels were well tolerated by the rats after implantation for seven days. Retinal physiology was evaluated in the implanted eyes by electroretinography (ERG) and the results were compared with the non-implanted eyes as control. The ERG data suggested that the sunconjunctivally-implanated hydrogels did not alter physiological functions of the retina. Further work on the in vivo release kinetics and biological activity of the released insulin from the implanted hydrogels are underway.