Hydrogels have been an area of active research for many years in the field of biomedical engineering. Recent advancements in nanotechnology have highlighted the extensive use of nanocomposite hydrogels and have gained attention due to their unique properties at nanoscale level. They exhibit excellent mechanical strength, optical density and superparamagnetic properties, which are being explored in composite systems. Novel biomaterials are being introduced by the combination of the nanofillers and the hydrogel matrix. In this chapter, we have highlighted the use of various nanocomposite hydrogel systems developed using natural as well as synthetic polymers and also elaborated their biomedical applications in wound dressings, bone replacements and biosensing.