The continuous and irresponsible addition of environmental pollutants into aqueous reservoirs due to excessive industrialization is a significant contemporary challenge. Nanomaterial-based catalytic reduction provides an effective way to convert these materials into environmentally useful products. Responsive polymeric assemblies, complemented with nanomaterials, represent advanced nanocatalysts that are gaining interest within the scientific community. These assemblies exhibit reversible morphological transitions in response to variations induced by external factors such as temperature, pH, or electromagnetic irradiation treatment. The term hybrid microgels has been coined for assemblies that contain both nanomaterial and smart polymeric components. This review presents recent advancements in the field of hybrid microgels as nanocatalysts for conducting reduction reactions on pollutants present in aqueous media. Apart from placing detailed emphasis on the advancements documented for these assemblies, the fundamentals associated with hybrid microgels, as well as the typical catalytic reduction, are also emphasized to develop an understanding for new academicians looking to explore this field. The author hopes that this critical review of the most recent academic literature, including the years spanning 2020 to 2023, will serve as a tutorial for the identification of research gaps in this field, along with its prospective solutions.