Diabetes mellitus is a chronic manifestation characterized by high levels of glucose in the blood resulting in several complications including diabetic wounds and ulcers, which predominantly require a longer duration of treatment and adversely affect the quality of life of the patients. Nanotechnology-based therapeutics (both intrinsic and extrinsic types) have emerged as a promising treatment in diabetic foot ulcer/chronic wounds owing to their unique characteristics and specific functional properties. In this review, we have focused on the significance of the use of lipids in the healing of diabetic ulcers, their interaction with the injured skin, and recent trends in lipid-based nanocarriers for the healing of diabetic wounds. Lipid nanocarriers are also being investigated for gene therapy in diabetic wound healing to encapsulate nucleic acids such as siRNA and miRNA, which could silence the expression of inflammatory cytokines overexpressed in chronic wounds. Additionally, these are also being explored for encapsulating proteins, peptides, growth factors, and other biological genetic material as therapeutic agents. Lipid-based nanocarriers encompassing a wide variety of carriers such as liposomes, niosomes, ethosomes, solid lipid nanoparticles, and lipidoid nanoparticles that are explored for the treatment of foot ulcers supplemented with relevant research studies have been discussed in the present review. Lipid-based nanodrug delivery systems have demonstrated promising wound healing potential, particularly in diabetic conditions due to the enhanced efficacy of the entrapped active molecules.