A robust adaptive immune response is essential for combatting pathogens. In the wrong context such as due to genetic and environmental factors, however, the same mechanisms crucial for self-preservation can lead to a loss of self-tolerance. Resulting autoimmunity manifests in the development of a host of organ-specific or systemic autoimmune diseases, hallmarked by aberrant immune responses and tissue damage. The prevalence of autoimmune diseases is on the rise, medical management of which focuses primarily on pharmacological immunosuppression that places patients at a risk of side effects, including opportunistic infections and tumorigenesis. Biomaterial-based drug delivery systems confer many opportunities to address challenges associated with conventional disease management. Hydrogels, in particular, can protect encapsulated cargo (drug or cell therapeutics) from the host environment, afford their presentation in a controlled manner, and can be tailored to respond to disease conditions or support treatment via multiplexed functionality. Moreover, localized delivery to affected sites by these approaches has the potential to concentrate drug action at the site, reduce off-target exposure, and enhance patient compliance by reducing the need for frequent administration. Despite their many benefits for the management of autoimmune disease, such biomaterial-based approaches focus largely on the downstream effects of hypersensitivity mechanisms and have a limited capacity to eradicate the disease. In contrast, direct targeting of mechanisms of hypersensitivity reactions uniquely enables prophylaxis or the arrest of disease progression by mitigating the basis of autoimmunity. One promising approach is to induce self-antigen-specific tolerance, which specifically subdues damaging autoreactivity while otherwise retaining the normal immune responses. In this review, we will discuss hydrogel-based systems for the treatment of autoimmune disease, with a focus on those that target hypersensitivity mechanisms head-on. As the field continues to advance, it will expand the range of therapeutic choices for people coping with autoimmune diseases, providing fresh prospects for better clinical outcomes and improved quality of life.