The fabrication of monodisperse nanostructures of highly controlled size and morphology with spatially distinct functional regions is a current area of high interest in materials science. Achieving this control directly in a biologically relevant solvent, without affecting cell viability, opens the door to a wide range of biomedical applications, yet this remains a significant challenge. Herein, we report the preparation of biocompatible and biodegradable poly(ε-caprolactone) 1D (cylindrical) and 2D (platelet) micelles in water and alcoholic solvents via crystallization-driven self-assembly. Using epitaxial growth in an alcoholic solvent, we show exquisite control over the dimensions and dispersity of these nanostructures, allowing access to uniform morphologies and predictable dimensions based on the unimer-to-seed ratio. Furthermore, for the first time, we report epitaxial growth in aqueous solvent, achieving precise control over 1D nanostructures in water, an essential feature for any relevant biological application. Exploiting this further, a strong, biocompatible and fluorescent hydrogel was obtained as a result of living epitaxial growth in aqueous solvent and cell culture medium. MC3T3 and A549 cells were successfully encapsulated, demonstrating high viability (>95% after 4 days) in these novel hydrogel materials.