Water scarcity and land infertility pose significant challenges to agricultural development, particularly in arid and semiarid regions. Improving soil-water-retention capacity and fertilizer utilization efficiency through the application of soil additives has become a pivotal approach in agricultural practices. Hydrogels exhibit exceptional water absorption and fertilizer retention capabilities, making them extensively utilized in the fields of agriculture, forestry, and desert control. Currently, most reviews primarily focus on the raw materials, classification, synthesis methods, and application prospects of hydrogels, with limited attention given to strategies for enhancing water-retention performance, mechanisms underlying fertilizer absorption, and environmental risks. This review covers the commonly used cross-linking methods in hydrogel synthesis and the structure−activity relationship between hydrogels and water as well as fertilizer. Additionally, a thorough analysis of the ecological benefits and risks associated with hydrogels is presented. Finally, future prospects and challenges are delineated from the perspectives of material design and engineering applications.