The polymer network of a nanocomposite (NC) hydrogel is physically crosslinked by nanoclay. Recently reported high toughness of nanocomposite (NC) hydrogels highlights the importance of their dissipative properties. The desorption of polymer chains from clay surface may contribute mostly to the hysteresis of NC hydrogels. Here, we proposed a mechanistically motivated pseudoelastic model capable of characterizing the hysteresis of NC hydrogels. The two parameters in the proposed damage variable can be determined by the experiments. We applied the model to the uniaxial tension and reproduced the ideal Mullins effect of NC hydrogels. Furthermore, we considered two nonideal effects: residual deformation and nonideal reloading in multicycle test, using newly proposed damage parameters. A power law with the order of 1/3 is established between the residual fraction of the stretch and the re-adsorption ratio of polymer chains. Finally, we demonstrated the dissipative properties of various NC hydrogels with the model.