Cold atmospheric plasma (CAP) has rapidly advanced as a pivotal area in medical research, notably in wound healing and cancer therapy. This review presents an overview of the mechanisms underlying the action of CAP on wound healing and cancer treatment. CAP plays opposing roles in wound healing and cancer treatment. In wound healing, CAP promotes cell migration and proliferation and eradicates pathogens near the wound site. In cancer therapy, CAP has been recognized for its ability to induce cell death through multiple mechanisms. These include activating the mitochondrial pathway, provoking endoplasmic reticulum stress, generating reactive oxygen species (ROS) and reactive nitrogen species (RNS), causing DNA damage, arresting the cell cycle, and modulating signaling pathways. Additionally, CAP’s oxidative stress can lead to significant changes in DNA and RNA within the nucleus, further contributing to its anti-cancer properties. These diverse effects underscore CAP’s therapeutic potential, though outcomes may differ based on the type of cancer and experimental settings. Furthermore, we compared the CAP application conditions for wound healing and cancer cell treatment. The type and concentration of ROS and RNS depend on plasma generation and treatment conditions. Thus, we aimed to identify the correlations between plasma properties and mechanisms of action by comparing CAP generation and treatment conditions in wound healing and cancer cell treatment.