Impaired wound healing is a major medical challenge, especially in diabetics. Over the centuries, the main goal of tissue engineering and regenerative medicine has been to invent biomaterials that accelerate the wound healing process. In this context, keratin-derived biomaterial is a promising candidate due to its biocompatibility and biodegradability. In this study, we evaluated an insoluble fraction of keratin containing casomorphin as a wound dressing in a full-thickness surgical skin wound model in mice (n = 20) with iatrogenically induced diabetes. Casomorphin, an opioid peptide with analgesic properties, was incorporated into keratin and shown to be slowly released from the dressing. An in vitro study showed that keratin-casomorphin dressing is biocompatible, non-toxic, and supports cell growth. In vivo experiments demonstrated that keratin-casomorphin dressing significantly (p < 0.05) accelerates the whole process of skin wound healing to the its final stage. Wounds covered with keratin-casomorphin dressing underwent reepithelization faster, ending up with a thicker epidermis than control wounds, as confirmed by histopathological and immunohistochemical examinations. This investigated dressing stimulated macrophages infiltration, which favors tissue remodeling and regeneration, unlike in the control wounds in which neutrophils predominated. Additionally, in dressed wounds, the number of microhemorrhages was significantly decreased (p < 0.05) as compared with control wounds. The dressing was naturally incorporated into regenerating tissue during the wound healing process. Applied keratin dressing favored reconstruction of more regular skin structure and assured better cosmetic outcome in terms of scar formation and appearance. Our results have shown that insoluble keratin wound dressing containing casomorphin supports skin wound healing in diabetic mice.