Radix Paeoniae Alba (RPA) has been used extensively in Chinese traditional medicine to treat gastrointestinal disorders, immune-modulating diseases, cancers, and numerous other conditions. A few of its active components include paeoniflorin, albiflorin, lactiflorin, and catechin. However, their therapeutic effectiveness is compromised by poor pharmacokinetic profiles, low oral bioavailability, short half-lives, and poor aqueous solubility. In this study, hydroxyethyl cellulose-grafted-2-acrylamido-2-methylpropane sulfonic acid (HEC-g-AMPS) hydrogels were successfully prepared for the controlled release of Radix Paeonia Alba-solid dispersion (RPA-SD). A total of 43 compounds were identified in RPA-SD using UHPLC-Q-TOF-MS analysis. The hydrogel network formation was confirmed by FTIR, TGA, DSC, XRD, and SEM. Hydrogels’ swelling and drug release were slightly higher at pH 1.2 (43.31% swelling, 81.70% drug release) than at pH 7.4 (27.73% swelling, 72.46% drug release) after 48 h. The gel fraction, drug release time and mechanical strength of the hydrogels increased with increased polymer and monomer concentration. Furthermore, the hydrogels were porous (84.15% porosity) and biodegradable (8.9% weight loss per week). Moreover, the synthesized hydrogels exhibited excellent antimicrobial and antioxidative properties.