Bottom-up fabrication by molecular self-assembly is now widely recognized as a potent method for generating interesting and functional nano- and mesoscale structures. Hydrogels from biocompatible molecules are an interesting class of mesoscale assemblies with potential biomedical applications. The self-assembly of a proteolysis resistant aromatic dipeptide containing a conformational constraining residue (APhe) into a stable hydrogel has been studied in this work. The reported dipeptide has free -N and -C termini. The hydrogel was self-supportive, was fractaline in nature, and possessed high mechanical strength. It was responsive to environmental conditions like pH, temperature, and ionic strength. The gel matrix could encapsulate and release bioactive molecules in a sustained manner. The described hydrogel showed no observable cytotoxicity to the HeLa and L929 cell lines in culture.