Hydrogels are materials used in a variety of applications, ranging from tissue engineering to drug delivery. The incorporation of nanoparticles to yield composite hydrogels has gained substantial momentum over the years since these afford tailor-making and extend material mechanical properties far beyond those achievable through molecular design of the network component. Here, we review different procedures that have been used to integrate nanoparticles into hydrogels; the types of interactions acting between polymers and nanoparticles; and how these underpin the improved mechanical and optical properties of the gels, including the self-healing ability of these composite gels, as well as serving as the basis for future development. In a less explored approach, hydrogels have been used as dispersants of nanomaterials, allowing a larger exposure of the surface of the nanomaterial and thus a better performance in catalytic and sensor applications. Furthermore, the reporting capacity of integrated nanoparticles in hydrogels to assess hydrogel properties, such as equilibrium swelling and elasticity, is highlighted.