Impaired diabetic wounds are serious pathophysiological complications associated with persistent microbial infections including failure in the closure of wounds, and the cause of a high frequency of lower limb amputations. The healing of diabetic wounds is attenuated due to the lack of secretion of growth factors, prolonged inflammation, and/or inhibition of angiogenic activity. Diabetic wound healing can be enhanced by supplying nitric oxide (NO) endogenously or exogenously. NO produced inside the cells by endothelial nitric oxide synthase (eNOS) naturally aids wound healing through its beneficial vasculogenic effects. However, during hyperglycemia, the activity of eNOS is affected, and thus there becomes an utmost need for the topical supply of NO from exogenous sources. Thus, NO-donors that can release NO are loaded into wound healing patches or wound coverage matrices to treat diabetic wounds. The burst release of NO from its donors is prevented by encapsulating them in polymeric hydrogels or nanoparticles for supplying NO for an extended duration of time to the diabetic wounds. In this article, we review the etiology of diabetic wounds, wound healing strategies, and the role of NO in the wound healing process. We further discuss the challenges faced in translating NO-donors as a clinically viable nanomedicine strategy for the treatment of diabetic wounds with a focus on the use of biomaterials for the encapsulation and in vivo controlled delivery of NO-donors.