The exploration and development of natural biopolymer-based hydrogels can be traced back to the 18th century. The rising interest in these hydrogels is largely due to their soaring demand in diverse applications such as tissue engineering, bio-separation, drug delivery, smart bioelectronics, and eco-friendly agriculture. However, one major drawback of these naturally derived biopolymer-based hydrogels is their subpar mechanical properties characterized by limited stretchability, modulus, and resilience, along with inadequate water adsorption capability. This restricts their broad-spectrum applicability. These biopolymers are typically crosslinked through different strategies to rectify these issues and functional groups present in polymer chains play crucial roles in crosslinking strategies. Consequently, the understanding of the chemical structure-function relationship in the crosslinked polymeric network is paramount for the design of an effective natural biopolymer-based hydrogel. A profound comprehension of the behavior of functional groups during crosslinking is therefore essential. This review provides a comprehensive overview of the chemistries of functional group interactions in natural biopolymers that are utilized in the development of functional hydrogels. Various categories of functional group interaction chemistries are examined and discussed in terms of crosslinking strategies (e.g., hydrogen bonding, ionic interaction, hydrophobic interaction) for hydrogel formation. Furthermore, the types, properties, and cutting-edge applications of resultant natural biopolymer-based hydrogels are outlined along with a discussion of the future prospects in this field of research.