Nanotechnology has emerged as the eminent focus of today's research to overcome challenges related to conventional drug delivery systems. A wide spectrum of novel delivery systems has been investigated to improve the therapeutic outcomes of drugs. The polymer-based nanocomposite hydrogels (NCHs) that have evolved as efficient carriers for controlled drug delivery are of particular interest in this regard. Nanocomposites amalgamate the properties of both nanoparticles (NPs) as well as hydrogels, exhibiting superior functionalities over conventional hydrogels. This multiple functionality is based upon advanced mechanical, electrical, optical as well as magnetic properties. Here is a brief overview of the various types of nanocomposites, such as NCHs based on Carbon-bearing nanomaterials, polymeric nanoparticles, inorganic nanoparticles, and metal and metal-oxide NPs. Accordingly, this article will review numerous ways of preparing these NCHs with particular emphasis on the vast biomedical applications displayed by them in numerous fields such as tissue engineering, drug delivery, wound healing, bioprinting, biosensing, imaging and gene silencing, cancer therapy, antibacterial therapy, etc. Moreover, various features can be tuned, based on the final application, by controlling the chemical composition of hydrogel network, which may also influence the released conduct. Subsequently, the recent work and future prospects of this newly emerging class of drug delivery system have been enlisted.