New technologies rely on the development of new materials, and these may simply be the innovative combination of known components. The structural combination of a polymer hydrogel network with a nanoparticle (metals, non-metals, metal oxides, and polymeric moieties) holds the promise of providing superior functionality to the composite material with applications in diverse fields, including catalysis, electronics, bio-sensing, drug delivery, nano-medicine, and environmental remediation. This mixing may result in a synergistic property enhancement of each component: for example, the mechanical strength of the hydrogel and concomitantly decrease aggregation of the nanoparticles. These mutual benefits and the associated potential applications have seen a surge of interest in the past decade from multi-disciplinary research groups. Recent advances in nanoparticle–hydrogel composites are herein reviewed with a focus on their synthesis, design, potential applications, and the inherent challenges accompanying these exciting materials.