Fluorescent carbon dots (CDs) play a versatile role in materials science. Herein, we have developed alginate-derived nitrogen-doped CDs as a drug carrier and a toughening agent for hydrogels by a microwave-assisted method. In the first phase of work, we carried out covalent conjugation of the drug onto the CD surface for controlled delivery of drug molecules, and in the second phase of work, we demonstrated how CDs could act as a toughening agent as well as a viscosity modifier for poly(acrylic acid--methacrylamide) copolymer hydrogels. The hydrogels were evaluated by Fourier transformed infrared spectroscopy, X-ray photoelectron spectroscopy, and solid-state nuclear magnetic resonance. The hybrid hydrogels have been tested to be mechanically robust with extraordinary stretchability (∼1200% elongation at break), recoverable to the original position (low permanent set), tunable water uptake, and thixotropic character in dynamic stress. The crosslinked structure has been evaluated through void calculation revealing gradual densification of the network with increasing CD content. Exceptional gel strength (ratio of elastic modulus to loss modulus; '/″) has been achieved from analogous crosslinking made by CDs. The delayed network rupturing and superstretchability could make this material a good choice for soft biomaterials and soft robotics.