The bio-composite hydrogels consisting of cellulose and vulcanized natural rubber (VNR) were successfully prepared by phase inversion. The hydrogel preparation of cellulose and VNR was performed by mixing a cellulose solution in 6 wt% lithium chloride in N,N-dimethylacetamide with VNR in toluene at a 10, 15 and 20wt% VNR loading level. The solution was then exposed to ethanol vapor for 1 day. The cellulose-VNR composites at 10-20 wt% VNR showed an excellent reinforcement, in terms of higher elastic and mechanical properties, even though the composite hydrogels retained a high amount of water (about 870-2400%). The nanosize morphology of the composite hydrogels indicated that the roughly aggregated VNR found in the cellulose medium formed with an interconnection layer between both the cellulose and VNR components, where the VNR was surrounded with fibrous cellulose medium. The resulting interconnection between the hydrophobic VNR and hydrophilic cellulose domains at higher VNR-loading levels enhanced the mechanical and elasticity properties of the bio-composite hydrogels.