By replacing an aqueous phase with a monomer or polymer solution, hydrogel droplets can be generated on microfluidic chips for encapsulation of single molecules/cells according to the Poisson distribution. The sol–gel transition property endows the hydrogel droplets with new functionalities and diversified applications in single molecule/cell analysis. The hydrogel can act as a 3D cell culture matrix to mimic the extracellular environment for long-term single cell culture, which allows further heterogeneity study in proliferation, drug screening, and metastasis at the single-cell level. The sol–gel transition allows reactions in solution to be performed rapidly and efficiently with product storage in the gel for flexible downstream manipulation and analysis. More importantly, controllable sol–gel regulation provides a new way to maintain phenotype-genotype linkages in the hydrogel matrix for high throughput molecular evolution. In this Account, we will review the hydrogel droplet generation on microfluidics, single molecule/cell encapsulation in hydrogel droplets, as well as the progress made by our group and others in the application of hydrogel droplet microfluidics for single molecule/cell analysis, including single cell culture, single molecule/cell detection, single cell sequencing, and molecular evolution.