Marine collagen peptides have high potential in promoting skin wound healing. This study aimed to investigate wound healing activity of collagen peptides derived from Sipunculus nudus (SNCP). The effects of SNCP on promoting healing were studied through a whole cortex wound model in mice. Results showed that SNCP consisted of peptides with a molecular weight less than 5 kDa accounted for 81.95%, rich in Gly and Arg. SNCP possessed outstanding capacity to induce human umbilical vein endothelial cells (HUVEC), human immortalized keratinocytes (HaCaT) and human skin fibroblasts (HSF) cells proliferation and migration in vitro. In vivo, SNCP could markedly improve the healing rate and shorten the scab removal time, possessing a scar-free healing effect. Compared with the negative control group, the expression level of tumor necrosis factor-α, interleukin-1β and transforming growth factor-β1 (TGF-β1) in the SNCP group was significantly down-regulated at 7 days post-wounding (p < 0.01). Moreover, the mRNA level of mothers against decapentaplegic homolog 7 (Smad7) in SNCP group was up-regulated (p < 0.01); in contrast, type II TGF-β receptors, collagen I and α-smooth muscle actin were significantly down-regulated at 28 days (p < 0.01). These results indicate that SNCP possessed excellent activity of accelerating wound healing and inhibiting scar formation, and its mechanism was closely related to reducing inflammation, improving collagen deposition and recombination and blockade of the TGF-β/Smads signal pathway. Therefore, SNCP may have promising clinical applications in skin wound repair and scar inhibition.