The injury of both central and peripheral nervous systems can result in neurological disorders and severe nervous diseases, which has been one of the challenges in the medical field. The use of peptide-based hydrogels for nerve repair and regeneration (NRR) provides a promising way for treating these problems, but the effects of the functions of peptide hydrogels on the NRR efficiency have been not understood clearly. In this review, we present recent advances in the material design, matrix fabrication, functional tailoring, and NRR applications of three types of peptide-based hydrogels, including pure peptide hydrogels, other component-functionalized peptide hydrogels, and peptide-modified polymer hydrogels. The case studies on the utilization of various peptide-based hydrogels for NRR are introduced and analyzed, in which the effects and mechanisms of the functions of hydrogels on NRR are illustrated specifically. In addition, the fabrication of medical NRR scaffolds and devices for pre-clinical application is demonstrated. Finally, we provide potential directions on the development of this promising topic. This comprehensive review could be valuable for readers to know the design and synthesis strategies of bioactive peptide hydrogels, as well as their functional tailoring, in order to promote their practical applications in tissue engineering, biomedical engineering, and materials science.