Acceleration of gelation in the biological environment and improvement of overall biological properties of a hydrogel is of enormous importance. Biopolymer stabilized gold (Au) nanoparticles (NPs) exhibit cytocompatibility and therapeutic activity. Hence, in situ gelation and subsequent improvement in the property of a hydrogel by employing Au NPs is an attractive approach. We report that stable Au NPs accelerate the conventional nucleophilic substitution reaction of activated halide-terminated poly(ethylene glycol) and tertiary amine functional macromolecules, leading to the rapid formation of injectable nanocomposite hydrogels in vivo and ex vivo with improved modulus, cell adhesion, cell proliferation, and cytocompatibility than that of a pristine hydrogel. NP surfaces with low chain grafting density and good colloidal stability are crucial requirements for the use of these NPs in the hydrogel formation. Influence of the structure of the amine functional prepolymer, the spacer connecting the halide leaving groups of the substrate, and the structure of the stabilizer on the rate promoting activity of the NPs have been evaluated with model low-molecular-weight substrates and macromolecules by H-1 NMR spectroscopy, rheological experiments, and density functional theory. Results indicate a significant effect of the spacer connecting the halide leaving group with the macromolecule. The Au nanocomposite hydrogels show sustained co-release of methotrexate, an anti-rheumatic drug, and the Au NPs. This work provides insights for designing an injectable nanocomposite hydrogel system with multifunctional property. The strategy of the use of cytocompatible Au NPs as a promoter provides new opportunity to obtain an injectable hydrogel system for biological applications.