Devices and methods for balloon delivery of rapamycin and other hydrophobic compounds to the wall of blood vessels. Balloon catheters, such as those used for balloon angioplasty, are modified with the addition of a reservoir of dry micelles, disposed at a suitable location within the balloon or catheter. The reservoir may be installed within the angioplasty balloon, within a lumen in communication with the angioplasty balloon, either as a loose or packed powder or as a film coating. The micelle preparation is reconstituted and the micelles are mobilized when the aqueous solution used to inflate the balloons is injected into the catheter. The micelles are infused into tissue surrounding the balloon when pressurized fluid within the balloon leaks through the wall of the balloon.