Copolymerization of N-isopropylacrylamide (NIPAM), itaconamic acid (IAM; 4-amino-2-methylene-4-oxobutanoic acid) and β-cyclodextrin was investigated in this study. β-cyclodextrin was at first modified by reacting with allyl glycidyl ether to substitute its OH end groups with moieties containing double bonds to facilitate the subsequent radical copolymerization with NIPAM and IAM. It was reported that poly(NIPAM-IAM) can respond to the change of temperature as well as pH value. In this study, the structure of β-cyclodextrin was introduced to poly(NIPAM-IAM) copolymers because of its cavity structure capable of encapsulating a variety of drug molecules. The tri-component copolymers, poly(CD-NIPAM-IAM), were synthesized with different monomeric ratios of NIPAM/IAM/β-CD and the hydrogels of the tri-component copolymers were also synthesized by additionally adding N,N′-methylenebisacrylamide as a cross-linking agent. The results show that the lower critical solution temperature (LCST) of the copolymer (or hydrogel) increases as the molar fraction of IAM increases. The transmission electron microscopic (TEM) images of linear copolymers (no cross-linking) show that molecules undergo self-assembly to have a distinct core–shell structure, compared to poly(CD-NIPAM) which contains no IAM. On the other hand, the scanning electron microscopic (SEM) images of hydrogels show that the pores gradually become sheet-like structures as the molar fraction of IAM increases to enhance the water absorption capacity. In order to exhibit the thermal and pH sensitivities of poly(CD-NIPAM-IAM) as the drug carrier, the drug release of the newly synthesized hydrogels at 37 °C and different pH values, pH = 2 and pH = 7.4, was investigated using atorvastatin which was used primarily as a lipid-lowering drug. The drug release experimental result shows that poly(CD-NIPAM-IAM) as a drug carrier was pH-sensitive and has the largest release rate at pH = 7.4 at 37 °C, indicating it is useful to release drugs in a neutral or alkaline (intestinal) environment.