Chitosan-based hydrogels are being widely used in biomedical applications due to their eco-friendly, biodegradable, and biocompatible properties, and their ability to mimic the extracellular matrix of many tissues. However, the application of chitosan hydrogels has been limited due to their inherent mechanical weakness. Halloysite nanotubes (HNTs) are naturally occurring aluminosilicate clay minerals and are widely used as a bulk filler to improve the performance characteristics of many polymeric materials. HNTs have also been shown to be a viable nanocontainer able to provide the sustained release of antibiotics, chemicals, and growth factors. This study's objective was to develop a stable drug delivery chitosan/HNT nanocomposite hydrogel that is biocompatible, biodegradable, and provides sustained drug release. In this study, chitosan/HNTs hydrogels containing undoped or gentamicin-doped HNTs were combined in different wt./wt. ratios and cross-linked with tripolyphosphate. The effects of chitosan and HNTs concentration and combination ratios on the hydrogel surface morphology, degradability, and mechanical properties, as well as its drug release capability, were analyzed. The results clearly showed that the addition of HNTs improved chitosan mechanical properties, but only within a narrow range. The nanocomposite hydrogels provided a sustained pattern of drug release and inhibited bacterial growth, and the live/dead assay showed excellent cytocompatibility.