The state of water, thermal transition behaviors, molecular interactions, crystalline structure, and mechanical performance of hydrated gelatin films were studied by differential scanning calorimetry (DSC), infrared spectroscopy (FTIR), X-ray diffraction, and universal testing instruments. The DSC results showed that with increase of the water content, two types of water, including unfreezable bound water and freezable water, appeared in turn. Below a critical water content of 30%, the glass transition temperature (Tg) of the hydrated gelatin films decreased notably with an increase in water content, which leveled off at water content higher than this threshold. This observation suggests that only the unfreezable water exhibits a plasticizing effect. In addition, the melting temperature (Tm) of hydrated gelatin films decreased continuously with an increase in water content, whereas the melting enthalpy showed a non-monotonic dependence on hydration level. Structural analysis showed that at medium hydration levels up to 13.4% water content, the unfreezable water facilitated the formation of additional triple helices, confirmed by DSC results. Spectral data revealed that the -OH groups of unfreezable water molecules interacted with the -NH groups of the protein via hydrogen bonds. Moreover, the mechanical properties of the hydrated gelatin films were sensitive to their hydration level, and the tensile strength was dominated by the helix content of the protein films. These results show the feasibility of using hydration to regulate the microstructure and properties of biopolymers.