Hydrogels are three-dimensional crosslinked functional materials with water-absorbing and swelling properties. Many hydrogels can store a variety of small functional molecules to structurally and functionally mimic the natural extracellular matrix; hence, they have been extensively studied for biomedical applications. Polyamidoamine (PAMAM) dendrimers have an ethylenediamine core and a large number of peripheral amino groups, which can be used to engineer various polymer hydrogels. In this review, an update on the progress of using PAMAM dendrimers for multifunctional hydrogel design was given. The synthesis of these hydrogels, which includes click chemistry reactions, aza-Michael addition, Schiff base reactions, amidation reactions, enzymatic reactions, and radical polymerization, together with research progress in terms of their application in the fields of drug delivery, tissue engineering, drug-free tumor therapy, and other related fields, was discussed in detail. Furthermore, the biomedical applications of PAMAM-engineered nano-hydrogels, which combine the advantages of dendrimers, hydrogels, and nanoparticles, were also summarized. This review will help researchers to design and develop more functional hydrogel materials based on PAMAM dendrimers.