In the present study, collagen hydrogel containing naringin was fabricated, characterized and used as the scaffold for peripheral nerve damage treatment. The collagen was dissolved in acetic acid, naringin added to the collagen solution, and cross-linked with 1-ethyl-3-(3-dimethylaminopropyl)-carbodiimide powder (EDC; 0.10 mM) to form the hydrogel. The microstructure, swelling behavior, biodegradation, and cyto/hemocompatibility of the fabricated hydrogels were assessed. Finally, the healing efficacy of the prepared collagen hydrogel loaded with naringin on the sciatic nerve crush injury was assessed in the animal model. The characterization results showed that the fabricated hydrogels have a porous structure containing interconnected pores with the average pore size of 90 µm. The degradation results demonstrated that about 70% of the primary weight of the naringin loaded hydrogel had been lost after 4 weeks of storage in PBS. The in vitro study showed that the proliferation of Schwann cells on the collagen/naringin hydrogel was higher than the control group (tissue culture plate) at both 48 and 72 h after cell seeding and even significantly higher than pure collagen 72 h after cell seeding (*p < 0.005, **p < 0.001). The animal study implied that the sciatic functional index reached to -22.13 ± 3.00 at the end of 60th days post-implantation which was statistically significant (p < 0.05) compared with the negative control (injury without the treatment) (-82.60 ± 1.06), and the pure collagen hydrogel (-59.80 ± 3.20) groups. The hot plate latency test, the compound muscle action potential, and wet weight-loss of the gastrocnemius muscle evaluation confirmed the positive effect of the prepared hydrogels on the healing process of the induced nerve injury. In the final, the histopathologic examinations depicted that the collagen/naringin hydrogel group reduced all the histological changes induced from the nerve injury and showed more resemblance to the normal sciatic nerve, with well-arranged fibers and intact myelin sheath. The overall results implied that the prepared collagen/naringin hydrogel can be utilized as a sophisticated alternative to healing peripheral nerve damages.