First, fix the source. A leaking pipe, roof, window, or shower pan has to be repaired before any drywall work, or the new wall will be damaged the same way.
Drywall that got briefly wet and dried quickly, with a light stain and a firm surface, can often be sealed with a stain-blocking primer and repainted. Press on it: if it's solid, it's usually salvageable.
If the board is soft, crumbling, or bulging, or the paper is peeling away, it needs to come out. Wet drywall loses its strength and can hold moisture inside the wall. We cut back to dry, solid board, check the cavity and insulation, and replace the section. If there's visible mold or a strong musty smell, we'll recommend having it assessed before the wall is closed up.
A replacement doesn't have to be obvious. Once the new board is hung, we tape, finish, and match the surrounding texture, then prime and paint. Done properly, you shouldn't be able to find the repair.