Smart electromagnetic interference (EMI) shielding materials with tunable EMI shielding effectiveness (SE) have garnered huge attention in the fabrication of next generation EM devices as well as innovative wearable electronics. Here, we report a polydimethylsiloxane (PDMS) encapsulated soft, flexible, and stretchable polyacrylamide (PAM)-alginate (Alg)-hydrogel/silver nanorod (AgNR) composite system for EMI SE application. The PDMS encapsulation not only enhances the tensile strength of the system from ∼0.057 MPa to ∼0.724 MPa but also restricts the evaporation of water from the hydrogel matrix. Consequently, at 14.5 GHz frequency, the EMI SE (∼48.72 dB) of the hydrogel was reduced to ∼10.52 dB (72 h at 30 °C) and ∼6.44 dB (72 h at 40 °C) and ∼8.03 dB after 1 week of settlement at ambient conditions. However, for the encapsulated hydrogel, the EMI SE (∼40.65 dB) value was marginally reduced to ∼33.86 dB, ∼31.45 dB, and ∼32.42 dB, respectively, under the same conditions. Moreover, by changing the sample thickness (increasing holding pressure in a VNA sample holder), the shielding performance can be altered from ∼48.72 to ∼53.63 dB for the hydrogel and from ∼40.65 to ∼44.03 dB for the encapsulated hydrogel. Thus, these findings provide an innovative strategy to fabricate a flexible and stretchable EMI shielding material with adjustable SE by varying the content of water and applying pressure for futuristic development in smart electronics.