Over the last decade reversible addition–fragmentation chain transfer (RAFT) polymerization has become a powerful technique for the preparation of well-defined copolymer architectures. Specifically, water-soluble, stimuli-responsive block, graft, and star copolymers have become especially significant in targeted delivery of diagnostic and therapeutic agents. In many cases RAFT polymerization is carried out directly in water at ambient temperature without the need for protecting group chemistry. Incorporation of functional monomers and selection of appropriate chain transfer agents (CTAs) allows facile, post-polymerization transformations of structopendant or structoterminal groups. This review focuses specifically on advances in the synthesis of (co)polymers from water-soluble monomers yielding stimuli-responsive systems. Additionally, we focus on recent reports of assembly into micelles and polymersomes induced by external stimuli including temperature, pH, and ionic strength. Reversible cross-linking methods to “lock” such assembled morphologies are addressed as well as potential applications in nanomedicine.