An N-terminally Boc (tert-butyloxycarbonyl) group-protected synthetic tripeptide (Boc-Phe-Phe-Ala-OH) has been found to form a translucent hydrogel in basic aqueous medium. This hydrogel material has been characterized using field emission scanning electron microscopy (FE-SEM), transmission electron microscopy (TEM), Fourier transformed infrared spectroscopy, differential scanning calorimetric, X-ray diffraction (XRD), and rheological studies. FE-SEM and TEM studies have revealed the formation of a nanofibrillar network structure upon gelation. Thiol (-SH) containing ligands (amino acid/peptide) have been used to stabilize small silver nanoparticles (AgNPs), and these thiol-capped silver nanoparticles have been incorporated into this hydrogel to prepare hybrid hydrogels. Morphological study of silver nanoparticles containing a hybrid hydrogel (using TEM experiments) has indicated the nice fabrication of AgNPs along the gel nanofibers. Fabrication of nanoparticles upon the gel nanofibers is due to noncovalent interactions between the capping ligands of the nanoparticles and the peptide-based hydrogel nanofibers. Rheological investigations of these hybrid hydrogels have shown the weakening of the mechanical strength of the hydrogel after incorporation of AgNPs within the native hydrogel system. Our studies have vividly shown the dependence of the elastic modulus (G') and yield stress (σ(y)) on three factors: (a) the nature of the stabilizing ligands used for AgNPs, (b) the size of the AgNPs, and (c) the amount of AgNPs used for the preparation of hybrid hydrogel systems. Modulation of the mechanical strength of the hybrid hydrogel can be successfully achieved by varying these above-mentioned factors. This modulation of the mechanical properties keeps a future promise to make tunable soft materials with interesting properties.