The current study involved investigation of the effect of storage temperature and moisture on the performance of poly(lactide-co-glycolide) (PLGA) microsphere/poly(vinyl-alcohol) (PVA) hydrogel composites. Physical aging occurred in composites stored at 25 °C due to structural relaxation. The glass transition temperature (Tg) and enthalpy of relaxation of the composites increased leading to a slower cumulative % release. The Tg of composites incubated at 40 °C, 75% RH decreased significantly due to the plasticization effect of absorbed water, whereas no change was observed in the Tg of microspheres alone; indicating that the hydrogel component enhanced water absorption. PLGA degradation occurred leading to significantly faster dexamethasone release following incubation at 40 °C, 75% RH for 1 month. No significant change was observed in the in vitro release profiles of composites after 6 months storage at 25 °C, 60% RH, however, release was accelerated following 12 months storage. Accordingly, exposure of the composites to ambient temperature/moisture during storage, shipping or handling may cause physical aging, plasticization, and degradation and hence, their performance may be affected. The extent to which the performance of the composite is affected by storage temperature and moisture is a net effect of physical aging and moisture induced plasticization/hydrolytic degradation.