Hydrogels of amino acid based cationic surfactant having C(16) tails were used to immobilize heme proteins and enzyme. These hydrogel-entrapped proteins/enzyme showed remarkable activation when dispersed in organic solvent. The activation effect (ratio of the activity of the hydrogel-entrapped enzyme in organic solvent to the activity of the native enzyme in water) of cytochrome c increased up to 350-fold with varying protein and gelator concentration. Hydrogel-entrapped hemoglobin and horseradish peroxidase (HRP) also showed markedly improved activity in organic solvent. Alteration in the structure of the gelator and its supramolecular arrangement showed that the protein immobilized within amphiphilic networks with larger interstitial space exhibited higher activation. This striking activation of hydrogel-entrapped proteins stems from the following effects: 1) the hydrophilic domain of the amphiphilic networks facilitates accessibility of the enzyme to the water-soluble substrate. 2) the surfactant, as an integral part of the amphiphilic network, assists in the formation of a distinct interface through which reactants and products are easily transferred between hydrophilic and hydrophobic domains. 3) Surfactant gelators help in the dispersion and stabilization of gel matrix into small particles in organic solvent, which enhances the overall surface area and results in improved mass transfer. The activation was dramatically improved up to 675-fold in the presence of nongelating anionic surfactants that helped in disintegration of the gel into further smaller-sized particles. Interestingly, hydrogel-immobilized HRP exhibited about 2000-fold higher activity in comparison to the activity of the suspended enzyme in toluene. Structural changes of the entrapped enzyme and the morphology of the matrix were investigated to understand the mechanism of this activation.