The engineering of hydrogel-based composites for photoluminescent biomaterials presents a promising frontier in material science, offering significant advancements in bioimaging, drug delivery, and tissue engineering. Hydrogels, known for their high-water content and biocompatibility, open new possibilities for dynamic interactions with biological systems when combined with photoluminescent properties. This chapter explores the strategic selection of materials and fabrication methods for developing photoluminescent hydrogel composites, emphasizing the trade-offs between stability, biocompatibility, and photoluminescent efficiency. A particular focus is given to photoluminescent eutectogels, a class of composite materials that combine distinct phases to enhance luminescent properties, offering novel avenues for biomedical applications. These biomaterials have been shown to exhibit remarkable potential in imaging, sensing, and therapeutic interventions, where their interactions with biological systems are critically evaluated, revealing mechanisms that govern cellular uptake, biocompatibility, and in vivo performance. Finally, the chapter outlines the future directions of this field, including the development of multifunctional hydrogels capable of integrating therapeutic and diagnostic functions in a single system, paving the way for next-generation biomedical technologies. Through a comprehensive review of material selection, fabrication strategies, and biomedical applications, this chapter provides a thorough understanding of the evolving landscape of photoluminescent hydrogel composites and their transformative impact on biomedicine.