Hydrogels are three-dimensional polymeric networks that exhibit impressive flexibility through appropriate chemical modification. Hydrogels can be prepared from natural or synthetic polymers which have shown promise in forming different components of stretchable electronic devices such as sensors and energy harvesters. Extensive efforts have been dedicated to creating novel designs, syntheses, and applications of hydrogels. This review presents a classification of hydrogels and describes the main approaches used to develop hydrogels. Moreover, the recent application of hydrogels in creating sensors, including hydrogel-based strain, gas, humidity, pH, and temperature sensors. Next, the current application of hydrogels as soft electrodes for energy harvesters is discussed. In addition, low-temperature tolerant, ultraflexible, biocompatible, and stretchable energy harvesters are illustrated by considering different compositions of hydrogels. The key challenges associated with the creation of hydrogel-based sensors and energy harvesters have been identified and discussed. Finally, a guideline for overcoming the current issues with hydrogel development and applications is provided for future research.