Hydrogel is one of the hottest biomaterials in recent years. Especially, magnetic hydrogels (MHs) prepared by combining unique magnetic nanoparticles (MNPs) with hydrogels have attracted wide attention due to their excellent biocompatibility, mechanical properties, absorbability and rich magnetic properties (magnetocaloric, magnetic resonance imaging and intelligent response, etc.).However, the current literature mainly focuses on the application of MHs, without fully understanding the relationship between the design strategies and applications of each function in MHs. This review highlights six major functional properties of MHs, including mechanical properties, adsorption, magnetocaloric effect, magnetic resonance (MR) imaging, intelligent response and biocompatibility. Principles and design strategies of each performance are thoroughly analyzed. Furthermore, the latest applications of MHs in biomedicine, soft actuators, environmental protection, chemistry and engineering in recent 5 years are introduced from the perspective of each function. In the carefully selected representative cases, the design strategies and application principle of multi-functional MHs are detailed, respectively. The classical fabrication processing of MHs is summarized. At last, we discuss the unmet needs and potential future challenges in MHs development and highlight its emerging strategies.