Hydrogels are dynamically evolving 3D networks composed of hydrophilic polymer scaffolds with significant applications in the healthcare and environmental sectors. Notably, protein-based hydrogels mimic the extracellular matrix, promoting cell adhesion. Further enhancing cell proliferation within these scaffolds are matrix-metalloproteinase-triggered amino acid motifs. Integration of cell-friendly modules like peptides and proteins expands hydrogel functionality. These exceptional properties position hydrogels for diverse applications, including biomedicine, biosensors, environmental remediation, and the food industry. Despite significant progress, there is ongoing research to optimize hydrogels for biomedical and environmental applications further. Engineering novel hydrogels with favorable characteristics is crucial for regulating tissue architecture and facilitating ecological remediation. This review explores the synthesis, physicochemical properties, and biological implications of various hydrogel types and their extensive applications in biomedicine and environmental sectors. It elaborates on their potential applications, bridging the gap between advancements in the healthcare sector and solutions for environmental issues.