This study aims to develop a novel composite drug delivery system (CDDS) for hydrophobic honokiol delivery: honokiol loaded micelles in thermosensitive hydrogel (honokiol micelles/hydrogel) based on biodegradable poly(ethylene glycol)-poly(epsilon-caprolactone)-poly(ethylene glycol) (PEG-PCL-PEG, PECE) copolymers. In our work, we found that PECE copolymers with different molecular weight and PEG/PCL ratios could be administered to form micelles or thermosensitive hydrogel, respectively. Honokiol loaded PECE micelles (honokiol micelles) were prepared by self-assembly of biodegradable PECE copolymer (PEG5000-PCL5000-PEG5000) triggered by its amphiphilic characteristic assisted by ultrasonication without using any organic solvents and surfactants. Meanwhile, biodegradable and injectable thermosensitive PECE hydrogel (PEG550-PCL2400-PEG550) with a lower sol-gel transition temperature at around physiological temperature was also prepared successfully. Furthermore, the obtained honokiol micelles/hydrogel CDDS was a free-flowing sol at ambient temperature and became a nonflowing gel at body temperature. The cytotoxicity results showed that the CDDS was a safe carrier and the encapsulated honokiol retained its potent antitumor effect. In addition, the in vitro release profile demonstrated a significant difference between rapid release of free honokiol and much slower and sustained release of honokiol micelles/hydrogel. The results suggested that the CDDS might have great potential applications in cancer chemotherapy.