Hydrogel-based biosensors have drawn considerable attention due to their various advantages over conventional detection systems. Recent studies have shown that hydrogel biosensors can be excellent alternative systems to detect a wide range of biomolecules, including small biochemicals, pathogenic proteins, and disease specific genes. Due to the excellent physical properties of hydrogels such as the high water content and stimuli-responsive behavior of cross-linked network structures, this system can offer substantial improvement for the design of novel detection systems for various diagnostic applications. The other main advantage of hydrogels is the role of biomimetic three-dimensional (3D) matrix immobilizing enzymes and aptamers within the detection systems, which enhances their stability. This provides ideal reaction conditions for enzymes and aptamers to interact with substrates within the aqueous environment of the hydrogel. In this review, we have highlighted various novel detection approaches utilizing the outstanding properties of the hydrogel. This review summarizes the recent progress of hydrogel-based biosensors and discusses their future perspectives and clinical limitations to overcome.