Diabetic chronic wounds (DCWs) are a severe complication of diabetes, and current treatments present several deficiencies, including unsatisfactory efficacy and inability to continuously supply oxygen. This review highlights the recent advances in a novel therapeutic strategy that addresses these challenges: considerable biological powerful inclusions, oxygen or hydrogen and ROS production, DCW glucose consumption, chemotaxis at the wound site, highly editable, great biological safety, low cost, and readily available. Over the past decade, this strategy has shown encouraging results in improving the healing delay induced by hyperglycemia, forming a new concept of “living material” application based on living algae. This review discusses the unique advantages of algae as a treatment strategy, the applications and characteristics of different types of living algae in wound dressings, and the challenges and improvement strategies for this innovative approach.