The formation of associative networks in semidilute aqueous solutions of hydrophobically modified hydroxyethylcellulose (HM-HEC) is dependent on intermolecular hydrophobic interactions. Addition of hydroxypropyl-beta-cyclodextrin (HP-beta-CD) monomers to the system provides decoupling of these associations via inclusion complex formation with the polymer hydrophobic tails. Results from viscosity, polymer NMR self-diffusion, and dynamic light scattering (DLS) measurements show that the hydrophobic interactions in HM-HEC solutions are effectively suppressed when the level of HP-beta-CD addition increases. Small-angle neutron scattering (SANS) results reveal that the large-scale association complexes in HM-HEC solutions are strongly diminished when the concentration of HP-P-CD rises. The time correlation data obtained from the DLS experiments unveiled the existence of two relaxation modes: one single exponential at short times followed by a stretched exponential at longer times. The fast mode is always diffusive, whereas the slow mode exhibits progressively stronger wavevector dependence as the intensity of the hydrophobic interactions increases. This feature, as well as the accompanying drop of the stretched exponential beta as the HP-beta-CD concentration decreases, is attributed to enhanced hydrophobic interactions and can be well rationalized in the framework of the coupling model of Ngai.