A novel way for the production of shape memory hydrogels containing crystalline domains is described. Hydrogels were prepared by micellar copolymerization of acrylic acid with the hydrophobic comonomer n-octadecyl acrylate (C18) in an aqueous NaCl solution of sodium dodecyl sulfate (SDS). The presence of NaCl causes the SDS micelles to grow and thus enables solubilization of large amounts (16% w/v) of C18 in the micellar solution. DSC measurements show that the swollen hydrogels, possessing 61-84% water, melt and crystallize with a change in temperature. Independent of the hydrophobe level between 20 and 50 mol %, the melting and crystallization temperatures of the hydrogels are 48 +/- 2 and 43 +/- 2 degrees C, respectively. The hydrogels exhibit 3 orders of magnitude change in the elastic modulus when the temperature changes between below and above the melting temperature of the crystalline domains. The blocky structure of the network chains formed by micellar polymerization is responsible for the drastic change in their mechanical properties and significant shape memory effect.