To facilitate the development of PEG-cleavable pH-sensitive liposomes (CL-pPSL), this study aimed to fully characterize a new pH-sensitive polymer, PEG-Hz-CHEMS. Polyethylene glycol (PEG) functionalised with 4-carboxybenzaldehyde (PEG) was linked to cholesteryl hemisuccinate (CHEMS) via an acid labile hydrazide-hydrazone hybrid bond (CONHNCH) to form PEG-Hz-CHEMS. The polymer was post-inserted into DOPE/CHEMS liposomes to form CL-pPSL. A validated stability-indicating HPLC-UV method was developed with the aid of multiple linear regression for the mobile phase. The assay was used to evaluate the pH-sensitivity, pathways of cleavage of the polymer and the PEGylation degree of CL-pPSL. The pH-sensitivity of CL-pPSL was compared with conventional PEGylated pH-sensitive (pPSL) using a calcein leakage assay. At 37 °C, PEG-Hz-CHEMS was relatively stable at pH 7.4 with a half-life of 24 h. In comparison, at pH 5.5 and pH 6.5 PEG detachment within 1 h was determined as 80%, and 50%, respectively. PEG detachment of the polymer was through simultaneous cleavage of the hydrazine (CON) and hydrazone (NC) bonds, depending on pH, thus the polymer is more pH-sensitive than those with a hydrazine bond only. The grafting densities of PEG-Hz-CHEMS on CL-pPSL were optimised to achieve a PEG density of 1.7% (mol). The unilamellar CL-pPSL (123 nm) were shown to be sable at least for 3 months at 4 °C and have enhanced pH-sensitivity compared with pPSL in the calcein leakage assay. Therefore, the smart cleavable PEG polymer is promising in liposome formulation to overcome the PEG dilemma.