We present the analysis of Fermi Large Area Telescope (LAT) gamma-ray observations of HB21, a mixed-morphology shell-type supernova remnant. Such supernova remnants are characterized by an interior thermal X-ray plasma, surrounded by a wider nonthermal shell emitting at radio frequencies. HB21 has a large angular size, making it a good candidate for detailed morphological and spectral studies with the LAT. The radio extension is $2^circtimes 1^circ$, compared to the LAT 68% containment angle of $sim 1^circ$ at 1 GeV. To understand the origin of gamma-ray emission, we compare LAT observations with other wavelengths that trace non-thermal radio synchrotron, nearby molecular clouds, shocked molecular clumps, and the central X-ray plasma. Finally, we model possible hadronic and leptonic emission mechanisms. We conclude that gamma-rays from HB21 are likely the result of electron bremsstrahlung or proton-proton collisions with an enhanced density due to interaction with the nearby clouds.