Traditional optical waveguides or mediums are often silica-based materials, but their applications in biomedicine and healthcare are limited due to the poor biocompatibility and unsuitable mechanical properties. In term of the applications in human body, a biocompatible hydrogel system with excellent optical transparency and mechanical flexibility could be beneficial. In this review, we explore the different designs of hydrogel-based optical waveguides derived from natural and synthetic sources. We highlighted key developments such as light emitting contact lenses, implantable optical fibres, biosensing systems, luminating and fluorescent materials. Finally, we expand further on the challenges and perspectives for hydrogel waveguides to achieve clinical applications.