Thermosensitive hydrogels displaying a high degree of swelling were successfully fabricated from cross-linked poly(N-isopropylacrylamide-co-2-acrylamido-2-methylpropanesulfonic acid) (P(NIPAM-co-AMPS)). The sulfonic acid groups in the copolymer networks strongly modulated the internal structure and swelling behavior of the P(NIPAM-co-AMPS), thereby lowering the critical solution temperature of the hydrogels. These groups acted as adsorption sites, enabling the in situ synthesis of Ni nanoparticles in P(NIPAM-co-AMPS) hydrogels. Significant changes in the average diameter and number of the Ni nanoparticles were observed when the concentration of AMPS was changed. The catalytic capability of P(NIPAM-co-AMPS)/Ni to act as a switched temperature reactor was demonstrated in a model reduction reaction. Kinetic data revealed that the adsorption of the reactants on the catalyst surface was the key factor in terms of the Langmuir-Hinshelwood model. The reaction rate of the P(NIPAM-co-AMPS)/Ni composite hydrogels did not increase monotonically; instead, the reaction rate decreased to some extent around the low critical solution temperature (LCST), demonstrating a thermally tunable catalytic activity. The P(NIPAM-co-AMPS)/Ni composites were also highly stable, and were usable after five cycles of use, retaining a high level of activity.