Hydrogels are three-dimensional polymeric networks, effective in trapping pollutants due to their greater surface area and porous structure. Hydrogels with excellent absorbing and water-retaining properties are innovative in the discipline of wastewater treatment. Introduction of functionalizing groups increases affinity for various pollutants, like heavy metals, and organic pollutants, along with selective nutrient adsorption. Although hydrogels possess vast potential, there are enormous challenges as well. For instance, for large-scale applications, hydrogels degrade under the dynamic environment of wastewater treatment plants. Hence, the mechanical stability of hydrogels needs to be increased. Furthermore, effective regeneration and reuse are required for the process to be economically viable. Besides, scaling up is a major concern for effective performance at laboratory scale, which may not be valid for industrial scale. Therefore, the present study focuses on novel functionalization methods like nanomaterial loading and composite hydrogel designing, hybrid technologies to enhance their efficiencies and make them applicable for a broad spectrum of contaminants. Application of hydrogels reduces environmental impact due to fewer adverse effects with the use of alternative raw materials and energy-efficient processes for cost reduction. Conclusively, cross-disciplinary research, their environmental impact studies, and sustainable practices can promote the importance of hydrogel technologies to meet the challenges of global water pollution.