In recent years, significant advancements have been made in the development of hydrogels as functional biomaterials, drawing increasing attention to their applications in biomedical engineering. Among various biopolymers, cellulose has emerged as an excellent candidate for hydrogel preparation due to its unique properties. As the most abundant natural biopolymer on Earth, cellulose offers advantages such as biocompatibility, biodegradability, renewability, good mechanical strength, and environmental friendliness, making it one of the safest materials available. The limitations of cellulose arise from its difficulty in dissolving due to the presence of inter- and intramolecular hydrogen bonds as well as van der Waals forces. However, this limitation can be addressed by chemically modifying cellulose, primarily through the etherification of hydroxyl groups, to produce various derivatives, including methylcellulose (MC), ethylcellulose (EC), hydroxyethyl methylcellulose (HEMC), hydroxypropyl cellulose (HPC), and sodium carboxymethyl cellulose (CMCNa). Crosslinking represents a vital step in the hydrogel preparation process, as it establishes the 3D structure and enhances physical and mechanical properties. Different crosslinking techniques are employed to produce hydrogels from cellulose and its derivatives, depending on the intended applications. Cellulose-based hydrogels have shown significant potential in biomedical applications, including tissue engineering, wound healing, drug delivery, 3D bioprinting, and more. In this review, we present the formulation of cellulose-based hydrogels and their biomedical applications. Specifically, we connect the latest knowledge in the literature on cellulose-based hydrogels with examples of how these materials have been utilized in biomedical applications. Additionally, we provide context regarding the importance of cellulose-based hydrogels in biomedical engineering, highlighting their unique advantages and promising potential in the field. Furthermore, we summarize the potential benefits of using cellulose-based hydrogels compared to other biomaterials.