Hydrogels derived from natural polysaccharides are ideal scaffolds for use in biomedical applications. pH-sensitive polyvinyl alcohol and chitosan hydrogels containing inclusion compounds of thyme oil (TM) with host methyl-𝜷-cyclodextrin (M𝜷CD) and hydroxypropyl-𝜷-cyclodextrin (H𝜷CD) and TM nanoemulsion (TM-nano) were prepared via controlled, biocompatible and low cost freeze–thaw method. The structure of the hydrogels was characterized by Fourier transform IR spectroscopy and optical and scanning electron microscopy. The physicochemical properties of the hydrogels such as gel fraction, swelling ratio and tensile properties were measured. The water vapor transmission rate of the hydrogels indicated that they can maintain a moist environment over the wound bed. Encapsulation and release of antibacterial TM from the hydrogels were determined by UV spectroscopy. In all cases, hydrogels with lower amounts of TM evidenced slower and more controlled release. Different kinetic models were applied for evaluating the drug release mechanism. The antibacterial activity of the samples was studied by counting the number of both Gram-negative and Gram-positive bacteria surviving in a brothmedium and the results proved the antibacterial activity of all prepared hydrogels. The results of an MTT (3-(4,5-dimethylthiazol-2yl)-2,5-diphenyltetrazolium bromide) assay indicated more cell viability of TM-nano hydrogels in comparison with those of TM-𝜷CD inclusion compounds. Cell attachment observations also showed great biocompatibility of TM-nano hydrogels. The prepared hydrogels, especially those containing TM-nano,might be used as potential wound dressings to improve the wound healing process.