In the present study, a biopolymer nanocomposite hydrogel based on gelatin and tin-doped gadolinium oxide (Sn-Gd2O3@GH) was prepared for the efficient reduction of water pollutants. The method of Sn-Gd2O3@GH preparation consisted of two steps. A Sn-Gd2O3 nanomaterial was synthesized by a hydrothermal method and mixed with a hot aqueous solution (T > 60 °C) of gelatin polymer, followed by cross-linking. Due to the presence of abundant functional groups on the skeleton of gelatin, such as carboxylic acid (–COOH) and hydroxyl (–OH), it was easily cross-linked with formaldehyde. The structure, morphology, and composition of Sn-Gd2O3@GH were further characterized by the FESEM, XRD, EDX, and FTIR techniques. The FESEM images located the distribution of the Sn-Gd2O3 nanomaterial in a GH matrix of 30.06 nm. The XRD patterns confirmed the cubic crystalline structure of Gd2O3 in a nanocomposite hydrogel, while EDS elucidated the elemental composition of pure Sn-Gd2O3 powder and cross-linked the Sn-Gd2O3@GH samples. The synthesized Sn-Gd2O3@GH nanocomposite was used for the removal of different azo dyes and nitrophenols (NPs). It exhibited an efficient catalytic reduction of Congo red (CR) with a reaction rate of 9.15 × 10−1 min−1 with a strong NaBH4-reducing agent. Moreover, the Sn-Gd2O3@GH could be easily recovered by discharging the reduced (colourless) dye, and it could be reused for a fresh cycle.