Biodegradability and enhanced biocompatibility with pH-sensitivity of hydrogels are becoming very important issues for biomaterials applications so as to minimize the host-body reactions such as, inflammatory, antigenic, and immunogenic problems. This study involves development of hydrogel matrices of gelatin conjugated/modified with highly hydrophilic, pH-sensitive and biocompatible polymer, poly (2-ethyl-2-oxazoline) and glyoxylic acid respectively. Various compositions of gelatin conjugated/modified with poly (2-ethyl-2-oxazoline) (gp) and glyoxylic acid (gg) were synthesized. The swelling kinetics, cell viability and drug release capability from the gels at pH 4.5 and 7.4 were investigated. The results of swelling kinetics showed that, both the degree of swelling (DS) and the maximum degree of swelling (MDS) increased as function of modification (increase in modification) and pH with an increase of time, which is due to increase in ionic groups. The drug-release (1% chlorhexidine) studies at pH 7.4 and 4.5 confirmed a proportional drug release with an increase in degree of swelling. The results of in-vitro cytotoxicity tests using mouse embryonic 3T3 fibroblast cells indicated, an improved cell viability for gelatin gels conjugated/modified with poly (2-ethyl-2-oxazoline) (gp) and glyoxylic acid (gg) gels, when compared with 1% glutaraldehyde cross-linked gelatin gels (gx). Hence, cross-linked gelatin gels can be replaced with gp/gg for potential use in biomedical applications as a matrix for drug delivery.