The re-epithelialization process gets severely dysregulated in chronic nonhealing diabetic foot ulcers/wounds. Keratinocyte growth factor (KGF or FGF-7) is the major modulator of the re-epithelialization process, which regulates the physiological phenotypes of cutaneous keratinocytes. The existing therapeutic strategies of growth factor administration have several limitations. To overcome these, we have designed a KGF-mimetic peptide (KGFp, 13mer) based on the receptor interaction sites in murine KGF. KGFp enhanced migration and transdifferentiation of mouse bone marrow-derived MSCs toward keratinocyte-like cells (KLCs). A significant increase in the expression of skin-specific markers Bnc1 (28.5-fold), Ck5 (14.6-fold), Ck14 (26.1-fold), Ck10 (187.7-fold), and epithelial markers EpCam (23.3-fold) and Cdh1 (64.2-fold) was associated with the activation of ERK1/2 and STAT3 molecular signaling in the KLCs. Further, to enhance the stability of KGFp in the wound microenvironment, it was conjugated to biocompatible 3D porous polymer scaffolds without compromising its active binding sites followed by chemical characterization using Fourier transform infrared spectroscopy, field-emission scanning electron microscopy, dynamic mechanical analysis, and thermogravimetry. In vitro evaluation of the KGFp-conjugated 3D polymer scaffolds revealed its potential for transdifferentiation of MSCs into KLCs. Transplantation of allogeneic MSC GFP using KGFp-conjugated 3D polymer scaffolds in chronic nonhealing type 2 diabetic wounds (db/db transgenic, 50−52 weeks old male mice) significantly enhanced re-epithelialization-mediated wound closure rate (79.3%) as compared to the control groups (Untransplanted −22.4%, MSC GFP -3D polymer scaffold −38.5%). Thus, KGFp-conjugated 3D porous polymer scaffolds drive the fate of the MSCs toward keratinocytes that may serve as potential stem cell delivery platform technology for tissue engineering and transplantation.