Microneedles (MNs), composed of multiple micron-scale needle-like structures attached to a base, offer a minimally invasive approach for transdermal drug delivery by penetrating the stratum corneum and delivering therapeutic agents directly to the epidermis or dermis. Hydrogel microneedles (HMNs) stand out among various MN types due to their excellent biocompatibility, high drug-loading capacity, and tunable drug-release properties. This review systematically examines the matrix materials and fabrication methods of HMN systems, highlighting advancements in natural and synthetic polymers, and explores their applications in treating conditions such as wound healing, hair loss, cardiovascular diseases, and cancer. Furthermore, the potential of HMNs for disease diagnostics is discussed. The review identifies key challenges, including limited mechanical strength, drug-loading efficiency, and lack of standardization, while proposing strategies to overcome these issues. With the integration of intelligent design and enhanced control over drug dosage and safety, HMNs are poised to revolutionize transdermal drug delivery and expand their applications in personalized medicine.