Unlike polymeric hydrogels, in the case of supramolecular hydrogels, the cross-linked network formation is governed by non-covalent forces. Hence, in these cases, the gelator molecules inside the network retain their characteristic physicochemical properties as no covalent modification is involved. Supramolecular hydrogels thus get dissolved easily in aqueous medium as the dissolution leads to a gain in entropy. Thus, any supramolecular hydrogel, insoluble in bulk water, is beyond the present understanding and hitherto not reported as well. Herein, we present a peptide-based (PyKC) hydrogel which remained insoluble in water for more than a year. Moreover, in the gel state, any movement of solvent or solute to and from the hydrogel is highly restricted resulting in a high degree of compartmentalization. The hydrogel could be re-dissolved in the presence of some biomolecules which makes it a prospective material for in vivo applications. Experimental studies and all atom molecular dynamics simulations revealed that a cysteine containing gelator forms dimers through disulfide linkage which self-assemble into PyKC layers with a distinct PyKC-water interface. The hydrogel is stabilized by intra-molecular hydrogen bonds within the peptide-conjugates and the π-π stacking of the pyrene rings. The unique confinement ability of the hydrogel is attributed to the slow dynamics of water which remains confined in the core region of PyKCvia hydrogen bonds. The hydrogen bonds present in the confined water need activation energies to move through the water depleted hydrophobic environment of pyrene rings which significantly reduces water transport across the hydrogel. The compartmentalizing ability is effectively used to protect enzymes for a long time from denaturing agents like urea, heat or methanol. Overall, the presented system shows unique insolubility and confinement properties that could be a milestone in the research of soft-materials. © 2019 The Royal Society of Chemistry.