Star polymers with a crosslinked nanogel core constitute an unusual class of polymers with many arms emanating from the functionalized core. Although the core is usually hydrophobic, the arms can be hydrophobic, hydrophilic or amphiphilic. We describe the synthesis of biodegradable nanogel core stars which are largely water soluble and use encapsulated pyrene fluorescence to probe the environment both in aqueous solution and in solid thin films. In spite of the expected hydrophobic nature of the inner portions, the encapsulated pyrene environment seems quite polar. Although the molecular environment based on the pyrene fluorescent probe of the inner aliphatic polyester regions is more polar than expected for an aliphatic polyester, the molecular environment of the encapsulated probe in aqueous solution is influenced by the proximity of water even though simulations suggest that water excursions into the inner regions of the hydrophobic core area are rare and transient. NMR studies in water show the disappearance of the arm polyester signals. This and the pyrene environmental probe studies are consistent with collapse of the inner polyester regions and localization of the probe at or near the hydrophobic/hydrophilic interface as suggested in the simulations. This study has implications for the encapsulation of strongly hydrophobic cargos barring some loosening of the collapsed core by sterically-demanding substituents, increased hydrophobicity and/or some optimized specific interactions of the cargo with the core.