The effect of hydrophobic modification on the mechanical and structural characteristics of hydrophobically modified alginate (HMA) solutions and hydrogels were evaluated. The HMA systems consisted of alkyl chains, C8, grafted onto alginate backbones. With an increase in degree of substitution of hydrophobic tails, the association became stronger in solution, but same was not true for gels. The contribution of ionic crosslinking was found to be the dominant factor in determining the mechanical strength of hydrogels. Rheological measurements of 2wt% HMA gels reveal formation of a strongly crosslinked network with an elastic modulus close to 100kPa. Small-angle X-ray scattering (SAXS) experiments indicate that HMA assembles into a disordered structure with regions rich in the hydrophobic domain surrounded by a crosslinked hydrophilic network.