The complex and chronic nature of psoriasis is responsible for the limited efficacy of current topical drug delivery systems for the management of the disease. The genetic origin of the disease via the activation of Caspase Recruitment Domain Family Member 14 (CARD14), leads to the upregulation of Nuclear Factor Erythroid 2-Related Factor (Nrf2) causing keratinocyte hyperproliferation. The skin thickening due to Matrix Metalloproteinase-19 (MMP-19) and various other skin alterations that can impede the drug absorption, thereby limiting the therapeutic outcomes of the conventional topical formulations. The hydrogels have shown promise in terms of exhibiting a synergistic effect by enhancing the drug permeation through the skin. The stimuli responsive hydrogels release drug at various biological and external stimuli, which are mainly associated with the various type of polymer matrix of the hydrogel materials like hyaluronic acid (HA), chitosan (CS), poly(lactic-co-glycolic acid (PLGA), polyethylene glycol (PEG), Pluronics, Carbopol ®, etc., that are being investigated for their potential in delivering anti-psoriatic drugs. In addition to serving as a basis for the topical system, hydrogels also display functional effects for reducing psoriatic symptoms by moisturizing the skin and increasing the retention time of the formulation. In this review, we aim to highlight the unique properties and recent advancements in polymeric hydrogels and their applications for the management of psoriasis.