In situ gel via intratumoral (i.t.) injection has been explored in cancer therapy because of the distinguished advantages of longer exposure time in tumor mass and less systemic exposure, which might enhance antitumor activity and reduce side effects. This novel technology can be achieved by incorporation of nano- or microparticle carriers in the hydrogel structure. Nano- or microparticle-hydrogel combination adds synergistic benefits to this novel cancer therapy and is considered as a new delivery system. In this study, glycol chitin was firstly obtained by acetylation of glycol chitosan and PLGA microspheres were prepared by W/O/W emulsion solution and solvents were removed by evaporation/extraction. Then, the surface of PLGA microspheres was modified by bio-chitosan. Finally, PLGA microspheres were incorporated with glycol chitin/PAA hydrogel to obtain a novel drug delivery system. FTIR confirms that glycol chitin/PAA hydrogel were successfully prepared. PLGA microspheres are spherical with pores on the surface and their particle size is about 100 μm. Rheological data indicates the gelation temperature of hydrogel is near body temperature at 7 wt% of glycol chitin. The gelation temperature does not vary with pH at this specific concentration. However, the gelation temperature drops significantly (eg. lower to 17.1℃ at pH 6.38) under different pH when 7 wt% glycol chitin is combined with constant concentration of PAA. This phenomenon confirms that glycol chitin/PAA hydrogel will turn to gel once being injected in vivo. The drug release studies indicates hydrogel composite incorporated biofunctional PLGA microspheres (PTX-BFPM-CH) has sustained release behavior of releasing PTX. Cell cytotoxicity demonstrates that this formulation can inhibit the growth of HepG2/C3A cancel cells up to 60% at day 14. This novel drug delivery system will be further studied for the potential use in treating liver cancer by local injection.