By delivering immunomodulatory drugs in vivo directly to lymph nodes draining an injection site, an opportunity exists to increase drug bioavailability to local immune cells. Importantly, particles smaller than 100nm are efficiently transported through lymphatic vessels to draining lymph nodes. To investigate whether this approach could be used for local delivery of immunomodulatory drugs, amphiphilic poly(ethylene glycol)-bl-poly(propylene sulfide) (PEG-bl-PPS) block copolymers forming 50nm micelles were used to encapsulate hydrophobic drugs. Micelle drainage was determined using fluorescent micelles and showed effective targeting of multiple immune cell subsets in lymph nodes. For functional studies of our formulations, two approaches were considered. To evaluate the efficacy of anti-inflammatory drug delivery, dendritic cell activation was shown to be prevented when mice were pretreated with micelles loaded with the glucocorticoid mometasone and then challenged with the TLR9 ligand, CpG. To evaluate whether immunosuppressive drug-loaded micelles were effective in prolonging MHC-mismatched allograft survival, BALB/c mice were treated for 14 consecutive days with drug-loaded micelles following transplantation of allogenic C57BL/6 tail skin. Micelles loaded with a mixture of rapamycin and tacrolimus prolonged allograft survival by 2-fold. Our results indicate that the drug-loaded micelle approach effectively targets the draining lymph nodes and exhibits proper immune regulation.