Polymer microgels have progressively become of more interest due to their potential application in the area of pharmaceuticals as drug delivery systems. Microgel particles which are essentially composed of a complex water soluble polymer network typically operate in aqueous environments.  This however, poses a problem as the delivery of hydrophobic compounds encapsulated in a water soluble polymer network (microgel) can become difficult at best. Thus, in order to expand the applicability of microgels to hydrophobic compounds, it is necessary to design microgels with hydrophobic compartments. Therefore, the purpose of this study focuses on the development of water soluble microgel nanoparticles containing encapsulated hydrophobic regions by creating stable multi- nanoemulsion systems. To achieve this, oil-in-water nanoemulsions were effectively encapsulated within these microgels using an oil-in-water-in-oil multi-emulsion as a templating system.  We demonstrate the formation of a stable peanut oil-in-water nanoemulsion system with diameter size of about 70nm, consisting of a solution of poly (ethylene glycol) diacrylate (PEGDA) and tween 20 as the continuous phase. In addition, we successfully synthesize 500 nm PEGDA microgel particles by using inverse nanoemulsions as a template. By combining both we produced PEGDA microgel particles containing encapsulated oil droplets, pending further experimentation to fully characterize the particles as well as ensure the presence of the hydrophobic domains. Such a system indeed shows great promise for future healthcare and commercial applications.