Hydrogel-based materials, if introduced into triboelectric nanogenerators (TENGs), can not only help to convert mechanical energy into electrical energy, but also offer excellent versatility, flexibility, sustainability, and especially, biocompatibility to the TENG based wearable electronic devices. This review synthesizes the latest research on multifunctional hydrogel-based TENGs (H-TENGs) and their sensing applications. First, this review elaborates on the operational principle and the driving factor of H-TENGs. Subsequently, it explores the impact of different functional components and additives on the properties of hydrogels and the performance of the as-designed TENGs. Although this review focuses on the balance between mechanical and electrical properties of hydrogels, which is the basis for the design of H-TENGs, it also discusses the key roles of other factors, including biocompatibility, hydrophobicity, anti-freeze properties, and antibacterial properties, in enhancing the user experience and expanding the application scenarios. And then, the applications of H-TENGs for strain sensing, motion detection, touch sensing, and vital sign monitoring are presented. At the end, current challenges and future perspectives for H-TENGs are proposed, with hope to provide references for the development and applications of biocompatible and self-powered sensing systems.