Use of brain-computer interfaces (BCIs) is rapidly becoming a transformative approach for diagnosing and treating various brain disorders. By facilitating direct communication between the brain and external devices, BCIs have the potential to revolutionize neural activity monitoring, targeted neuromodulation strategies, and the restoration of brain functions. However, BCI technology faces significant challenges in achieving long-term, stable, high-quality recordings and accurately modulating neural activity. Traditional implantable electrodes, primarily made from rigid materials like metal, silicon, and carbon, provide excellent conductivity but encounter serious issues such as foreign body rejection, neural signal attenuation, and micromotion with brain tissue. To address these limitations, hydrogels are emerging as promising candidates for BCIs, given their mechanical and chemical similarities to brain tissues. These hydrogels are particularly suitable for implantable neural electrodes due to their three-dimensional water-rich structures, soft elastomeric properties, biocompatibility, and enhanced electrochemical characteristics. These exceptional features make them ideal for signal recording, neural modulation, and effective therapies for neurological conditions. This review highlights the current advancements in implantable hydrogel electrodes, focusing on their unique properties for neural signal recording and neuromodulation technologies, with the ultimate aim of treating brain disorders. A comprehensive overview is provided to encourage future progress in this field. Implantable hydrogel electrodes for BCIs have enormous potential to influence the broader scientific landscape and drive groundbreaking innovations across various sectors.