Hydrogels are three-dimensional crosslinked hydrophilic polymer networks with great potential in drug delivery, tissue engineering, wound dressing, agrochemicals application, food packaging, and cosmetics. However, conventional synthetic polymer hydrogels may be hazardous and have poor biocompatibility and biodegradability. Algal polysaccharides are abundant natural products with biocompatible and biodegradable properties. Polysaccharides and their derivatives also possess unique features such as physicochemical properties, hydrophilicity, mechanical strength, and tunable functionality. As such, algal polysaccharides have been widely exploited as building blocks in the fabrication of polysaccharide-based hydrogels through physical and/or chemical crosslinking. In this review, we discuss the extraction and characterization of polysaccharides derived from algae. This review focuses on recent advances in synthesis and applications of algal polysaccharides-based hydrogels. Additionally, we discuss the techno-economic analyses of chitosan and acrylic acid-based hydrogels, drawing attention to the importance of such analyses for hydrogels. Finally, the future prospects of algal polysaccharides-based hydrogels are outlined.