Supramolecular polymer hydrogels represent a cutting-edge drug delivery system with tunable properties for localized and long-term therapeutic applications. Unlike covalently crosslinked hydrogels, supramolecular hydrogels utilize non-covalent interactions such as host-guest inclusion, hydrogen bonding, pi-pi stacking, hydrophobic forces and metal-ligand coordination, enabling dynamic, self-healing and stimuli-responsive behavior. These properties facilitate precise drug encapsulation and controlled release, making them suitable for cancer therapy, wound healing, neurological disorders, infectious disease treatment, and diabetes management. Stimuli-responsive hydrogels, including pH-, thermoresponsive and enzyme-degradable variants, ensure drug release under specific physiological conditions, improving therapeutic efficacy while minimizing systemic toxicity. Advances in polymer chemistry, nanotechnology and computational modeling have enabled the design of biodegradable, injectable and bioadhesive hydrogel formulations with prolonged drug retention times. However, clinical translation challenges, such as biostability, reproducibility and regulatory approval, remain. This review provides an in-depth analysis of hydrogel design, drug release mechanisms, biomedical applications and future perspectives, emphasizing their potential to revolutionize precision medicine and regenerative therapies.