Polyrotaxanes were synthesized as novel biodegradable polymers with supramolecular assembly and their properties evaluated in vitro. The synthesis of biodegradable polyrotaxanes consists of three steps: preparation of an inclusion complex consisting of alpha-cyclodextrins (alpha-CDs) and amino-terminated poly(ethylene glycol) (PEG); introduction of L-phenylalanine (L-Phc) at each complex terminal via peptide linkages: and hydroxypropylation of alpha-CDs in the polyrotaxanes. Succinimide ester of benzyloxycarbonyl-L-Phe was condensed with the terminal amino groups of the inclusion complex. 1H-NMR and GPC results showed that alpha-CDs were threaded onto a PEG chain and L-Phe moieties were introduced at each terminal of the PEG chain. Further, the amount of threaded alpha-CDs was found to be governed by the molecular weight of PEG. The hydroxypropylation of alpha-CDs improved the solubility of the polyrotaxanes in PBS (pH 7.4). The hydroxypropylated (HP-) polyrotaxanes were characterized by terminal peptide cleavage using papain. In vitro degradation of HP-polyrotaxanes revealed that HP-alpha-CDs threaded onto a PEG chain were released only when terminal peptide linkages were cleaved. Moreover, threaded HP-alpha-CDs onto a PEG chain was found to be completely released. Kinetics of terminal peptide cleavage were also evaluated by catalytic efficiency (kcat/K(m)). The kcat/K(m) values were found to be independent of the molecular weight of HP-polyrotaxanes but to be affected by terminal hydrophobic moieties. It is proposed that our designed polyrotaxanes are feasible as novel drug carriers.