Hydrogels are hydrophilic polymer materials that provide a wide range of physicochemical properties as well as are highly biocompatible. Biomedical researchers are adapting these materials for the ever-increasing range of design options and potential applications in diagnostics and therapeutics. Along with innovative hydrogel polymer backbone developments, designing polymer additives for these backbones has been a major contributor to the field, especially for expanding the functionality spectrum of hydrogels. For the past decade, researchers invented numerous hydrogel functionalities that emerge from the rational incorporation of additives such as nucleic acids, proteins, cells, and inorganic nanomaterials. Cases of successful commercialization of such functional hydrogels are being reported, thus driving more translational research with hydrogels. Among the many hydrogels, here we reviewed recently reported functional hydrogels incorporated with polymer additives. We focused on those that have potential in translational medicine applications which range from diagnostic sensors as well as assay and drug screening to therapeutic actuators as well as drug delivery and implant. We discussed the growing trend of facile point-of-care diagnostics and integrated smart platforms. Additionally, special emphasis was given to emerging bioinformatics functionalities stemming from the information technology field, such as DNA data storage and anti-counterfeiting strategies. We anticipate that these translational purpose-driven polymer additive research studies will continue to advance the field of functional hydrogel engineering.