Food hydrogels are effective materials of great interest to scientists because they are safe and beneficial to the environment. Hydrogels are widely used in the food industry due to their three-dimensional crosslinked networks. They have also attracted a considerable amount of attention because they can be used in many different ways in the food industry, for example, as fat replacers, target delivery vehicles, encapsulating agents, etc. Gels—particularly proteins and polysaccharides—have attracted the attention of food scientists due to their excellent biocompatibility, biodegradability, nutritional properties, and edibility. Thus, this review is focused on the nutritional importance, microstructure, mechanical characteristics, and food hydrogel applications of gels. This review also focuses on the structural configuration of hydrogels, which implies future potential applications in the food industry. The findings of this review confirm the application of different plant- and animal-based polysaccharide and protein sources as gelling agents. Gel network structure is improved by incorporating polysaccharides for encapsulation of bioactive compounds. Different hydrogel-based formulations are widely used for the encapsulation of bioactive compounds, food texture perception, risk monitoring, and food packaging applications.