The latest data released by the International Diabetes Federation indicates that there are currently 589 million people aged 20-79 living with diabetes worldwide. Diabetic wounds are one of the most common complications in diabetic patients. Traditional treatment approaches suffer from drawbacks including susceptibility to microbial infection and suboptimal therapeutic outcomes. Consequently, the development of highly effective methods for diabetic wounds is urgently required. Carbon dots, an emerging nanomaterial of carbon base, demonstrate immense potential for biological applications due to their excellent biocompatibility, ease of functionalization, and visualization capabilities, offering novel strategies for diabetic wound treatment. This review systematically discusses the mechanisms of action and research progress of functionalized carbon dots (FCDs) in diabetic wound healing. Firstly, it elucidates the complex pathological microenvironment of diabetic wounds along with the construction and properties of FCDs. Secondly, it focuses on analyzing the mechanisms by which FCDs synergistically regulate the wound microenvironment and promote diabetic wound repair through multiple pathways, including scavenging reactive oxygen species, modulating immune inflammation, and stimulating angiogenesis. Finally, it summarises the clinical challenges facing FCDs and outlines future research directions.