Inspired by the emerging potential of photoluminescent hydrogels, this work unlocks new avenues for advanced biosensing, bioimaging, and drug delivery applications. Carbon quantum dots (CDs) are deemed particularly promising among various optical dyes, for enhancing polymeric networks with superior physical and chemical properties. This study presents the synthesis of CDs derived from Prunella vulgaris, a natural plant resource, through a single-step hydrothermal process, followed by their uniform integration into hydrogel matrices via an in situ free radical graft polymerization. The resulting CD-integrated hydrogels exhibit multifunctionality in biomedical applications, featuring a diffusion-controlled drug release mechanism, permit concurrent delivery of photoluminescent CDs and therapeutic agents, enabling real-time monitoring over 32 h. In addition, these hydrogels function as a broad-range optical pH sensor (pH 3-11), provide robust ultraviolet (UV) shielding, and demonstrate nanozyme-like peroxidase activity. Critically, biocompatibility tests confirm their non-cytotoxicity toward fibroblast cells, establishing these hydrogels as promising candidates for diverse biomedical applications. These include advanced wound dressings that monitor the healing process and detect infection through pH sensing, and promote healing through the nanozymatic activity, all while maintaining a moist wound microenvironment. These hydrogels demonstrate exceptional suitability for advanced smart drug delivery, effective UV-blocking, and as innovative platforms for in vivo sensing and bioimaging.