Considerable progress has been made in synthesizing "intelligent", biodegradable hydrogels that undergo rapid changes in physicochemical properties once exposed to external stimuli. These advantageous properties of stimulus-triggered materials make them highly appealing to diverse biomedical applications. Of late, research on the incorporation of light-triggered nanoparticles (NPs) into polymeric hydrogel networks has gained momentum due to their ability to remotely tune hydrogel properties using facile, contact-free approaches, such as adjustment of wavelength and intensity of light source. These multi-functional NPs, in combination with tissue-mimicking hydrogels, are increasingly being used for on-demand drug release, preparing diagnostic kits, and fabricating smart scaffolds. Here, the authors discuss the atomic behavior of different NPs in the presence of light, and critically review the mechanisms by which NPs convert light stimuli into heat energy. Then, they explain how these NPs impact the mechanical properties and rheological behavior of NPs-impregnated hydrogels. Understanding the rheological behavior of nanocomposite hydrogels using different sophisticated strategies, including computer-assisted machine learning, is critical for designing the next generation of drug delivery systems. Next, they highlight the salient strategies that have been used to apply light-induced nanocomposites for diverse biomedical applications and provide an outlook for the further improvement of these NPs-driven light-responsive hydrogels.