Paper-based analytical devices are a strong candidate for development due to the global need for accurate, easy-to-use, and cost-effective tools. Paper offers potential as a substrate for biomedical diagnostic devices, but on its own it is limited in versatility. By combining paper with hydrogel, researchers are able to improve automation, sensitivity, affordability, flexibility, and speed. Hydrogel, a highly biocompatible material, enhances fluid flow control and the biocompatibility of paper for functional interaction with biomolecules. Hydrogel-coated paper has been utilized for various applications, including separation and detection, microfluidics, and cell culture. Here we summarize the paper-based analytical tools with hydrogel incorporated into the paper substrate for biomedical purposes. The use of hydrogel-coated paper offers new opportunities for advanced analytical tools with improved sensitivity and functionality.