This study focuses on the catalytic reduction of methylene blue (MB) dye using a hydrogel-based nanocomposite. A hydrogel (CNAM hydrogel) was synthesized via free radical polymerization using chitosan as the base material, acrylamide (AAm) and N-isopropyl acrylamide (NIPAM) as monomers, and N, N-methylene bisacrylamide (MBA) as a crosslinker. By varying MBA content, three grades of hydrogel were prepared. Cobalt oxide nanoparticles (Co3O4 NPs) were incorporated into the hydrogel matrix forming a nanocomposite (CNAM@Co3O4 NCs), which exhibited improved thermal stability and structural integrity, enhancing its catalytic reduction performance for MB dye removal. The materials were characterized using Fourier transform infrared (FTIR) spectroscopy, point of zero charge (Delta pH(pzc)) analysis, X-ray diffraction (XRD) analysis, Thermogravimetric (TG) analysis, Gel permeation chromatography (GPC) analysis, Scanning Electron Microscope (SEM), Energy dispersive X-ray (EDX) analysis, BET analysis, and Transmission electron microscopy (TEM) analysis. UV-Visible spectrophotometry was employed to quantitatively analyze the reduction of methylene blue (MB) dye. The Langmuir and Freundlich isotherm model fit best with adsorption kinetic data with adsorption capacity of 380.066 mg/g. The equilibrium data followed Langmuir isotherm model, and adsorption process conformed to the intra-particle diffusion kinetic model. Additionally, the use of NaBH4 as a reducing agent, enabled rapid reduction of the adsorbed MB dye, further demonstrating the nanocomposite's catalytic efficiency. The CNAM@Co3O4 NCs exhibited a remarkable 95.28% MB dye reduction under optimal conditions. The CNAM@Co3O4 NCs shows significant promise for effective MB dye removal and has a promising potential in wastewater treatment applications.