Topical emollients are known to provide symptomatic relief for atopic dermatitis. In hospitals, wet-wrap therapy has been shown to benefit children with moderate-to-severe atopic dermatitis (AD), but the application of wet-wraps is tedious and time-consuming. Topical emollients have low residence time and often dry out easily. The aim of this work was to develop a hydrogel-gauze dressing that is not only easy to apply but also rehydrates and traps moisture to provide longer relief for AD patients. In this study, a prototype hydrogel-gauze dressing was developed with varying ratios of sodium carboxymethylcellulose (NaCMC) and propylene glycol. The hydrogel-gauze dressings were assessed based on the moisture vapor transmission rate, moisture absorption, mechanical properties and storage stability over three months. Then, the efficacy of the hydrogel-gauze dressing was compared to topical emollients using transgenic NC/Nga mice with AD-like lesions. The NaCMC hydrogel-gauze dressings significantly lowered transepidermal water loss, and the animals displayed a faster recovery, which indicates that hydrogel-gauze dressings can trap moisture more effectively and accelerate AD healing. Hence, we propose that hydrogel-gauze dressings can potentially become an alternative to wet-wrap therapy due to the ease of application and the higher efficacy compared to topical products.