This review critically evaluates advancements in multifunctional hydrogels, particularly focusing on their applications in osteoarthritis (OA) therapy. As research evolves from traditional natural materials, there is a significant shift towards synthetic and composite hydrogels, known for their superior mechanical properties and enhanced biodegradability. This review spotlights novel applications such as injectable hydrogels, microneedle technology, and responsive hydrogels, which have revolutionized OA treatment through targeted and efficient therapeutic delivery. Moreover, it discusses innovative hydrogel materials, including protein-based and superlubricating hydrogels, for their potential to reduce joint friction and inflammation. The integration of bioactive compounds within hydrogels to augment therapeutic efficacy is also examined. Furthermore, the review anticipates continued technological advancements and a deeper understanding of hydrogel-based OA therapies. It emphasizes the potential of hydrogels to provide tailored, minimally invasive treatments, thus highlighting their critical role in advancing the dynamic field of biomaterial science for OA management.