This paper reports on the degradation and protein release behavior of a self-assembled hydrogel system composed of β-cyclodextrin- (βCD) and cholesterol-derivatized 8-arm star-shaped poly(ethylene glycol) (PEG8). By mixing βCD- and cholesterol-derivatized PEG8 (molecular weights 10, 20 and 40 kDa) in aqueous solution, hydrogels with different rheological properties are formed. It is shown that hydrogel degradation is mainly the result of surface erosion, which depends on the network swelling stresses and initial crosslink density of the gels. This degradation mechanism, which is hardly observed for other water-absorbing polymer networks, leads to a quantitative and nearly zero-order release of entrapped proteins. This system therefore offers great potential for protein delivery.