Owing to their unique chemical and physical properties, hydrogels are attracting increasing attention in both basic and translational biomedical studies. Although the classical hydrogels with static networks have been widely reported for decades, a growing number of recent studies have shown that structurally dynamic hydrogels can better mimic the dynamics and functions of natural extracellular matrix (ECM) in soft tissues. These synthetic materials with defined compositions can recapitulate key chemical and biophysical properties of living tissues, providing an important means to understanding the mechanisms by which cells sense and remodel their surrounding microenvironments. This review begins with the overall expectation and design principles of dynamic hydrogels. We then highlight recent progress in the fabrication strategies of dynamic hydrogels including both degradation-dependent and degradation-independent approaches, followed by their unique properties and use in biomedical applications such as regenerative medicine, drug delivery, and 3D culture. Finally, challenges and emerging trends in the development and application of dynamic hydrogels are discussed.