Poly(vinyl alcohol) (PVA) hydrogels were prepared by quenching solutions containing PVA polymer in pure water or an aqueous solution of dimethylsulfoxide (DMSO). Remarkably different PVA hydrogels were obtained by varying processing parameters, i.e. DMSO concentration, initial PVA concentration and quench temperature. The bulk structure of PVA hydrogels was investigated by scanning electron microscopy of samples prepared by freeze-etching. Physical and mechanical properties of the hydrogels were evaluated to determine the effects of the processing parameters. The experiments were planned according to the Box-Behnken design for surface response. PVA hydrogels prepared at low quench temperature using high DMSO and PVA concentrations exhibit low water content and significantly improved hardness, tensile strength, elongation and tear resistance strength. The best mechanical properties are obtained at the maximum DMSO concentration investigated, 75 wt%. The optical transparency of PVA hydrogels is optimized for samples prepared using 75 wt% DMSO solution containing 8 to 9 wt% PVA at a quench temperature between -20 and -35 degrees C. An increase in DMSO and/or PVA concentrations leads to a more homogeneous and denser hydrogel structure with significantly lower equilibrium swelling. The presence of DMSO-water complexes in the medium alters the gelation mechanism and causes differences in hydrogel structure and properties.