In pain relief, lidocaine has gained more attention as a local anesthetic. However, there are several side effects that limit the use of local anesthetics. Therefore, it is hypothesized that a hydrogel system with facile design can be used for prolonged release of lidocaine. In this study, we developed a formulation comprises of sodium alginate (SA) and graphene oxide (GO) to prolong the release of lidocaine. The gelation was induced by physically crosslinking the alginate with Ca2+ ions. The formation of blank SA and GO-reinforced SA hydrogels was investigated with different concentration of Ca2+ ions. The controlled release of lidocaine hydrochloride (LH) on both hydrogel systems was studied in PBS solution. The GO-reinforced SA hydrogels exhibited more sustained release than SA hydrogels without GO. In vitro biocompatibility test in L929 fibroblast cells confirmed the non-toxic property of hydrogels. Furthermore, to prove the in-situ gelation and biodegradability of hydrogels the hydrogels were injected on mice model and confirmed the stable gel formation. The hydrogels implanted onto the subcutaneous tissue of hydrogels retained over one week. These results indicate that LH-loaded GO-reinforced SA hydrogel can be a potential biomaterial for controlled release of local anesthetics.