Green nanotechnology is now accepted as an environmentally friendly and cost-effective advance with various biomedical applications. The cyanobacterium Synechocystis sp. is a unicellular spherical cyanobacterium with photo- and hetero-trophic capabilities. This study investigates the ability of this cyanobacterial species to produce silver nanoparticles (AgNPs) and the wound-healing properties of the produced nanoparticles in diabetic animals. Methods: UV–visible and FT-IR spectroscopy and and electron microscopy techniques investigated AgNPs’ producibility by Synechocystis sp. when supplemented with silver ion source. The produced AgNPs were evaluated for their antimicrobial, anti-oxidative, anti-inflammatory, and diabetic wound healing along with their angiogenesis potential. Results: The cyanobacterium biosynthesized spherical AgNPs with a diameter range of 10 to 35 nm. The produced AgNPs exhibited wound-healing properties verified with increased contraction percentage, tensile strength and hydroxyproline level in incision diabetic wounded animals. AgNPs treatment decreased epithelialization period, amplified the wound closure percentage, and elevated collagen, hydroxyproline and hexosamine contents, which improved angiogenesis factors’ contents (HIF-1α, TGF-β1 and VEGF) in excision wound models. AgNPs intensified catalase (CAT), superoxide dismutase (SOD), and glutathione peroxidase (GPx) activities, and glutathione (GSH) and nitric oxide content and reduced malondialdehyde (MDA) level. IL-1β, IL-6, TNF-α, and NF-κB (the inflammatory mediators) were decreased with AgNPs’ topical application. Conclusion: Biosynthesized AgNPs via Synechocystis sp. exhibited antimicrobial, anti-oxidative, anti-inflammatory, and angiogenesis promoting effects in diabetic wounded animals.