Chronically elevated blood glucose levels result in reduced leukocyte function and cell malnutrition, which contribute to a high rate of wound infection and associated healing problems in diabetic patients. In the present study, the role of biotinylated GHK peptide (BioGHK) incorporated collagen biomaterial was tested for wound healing in diabetic rats. The rate of wound contraction and the levels of collagen, uronic acid, protein and DNA in the granulation tissue were determined. Further, the concentration of nitric oxide and other skin antioxidants was also monitored during the study. In diabetic rats treated with BioGHK incorporated collagen (Peptide Incorporated Collagen--PIC), the healing process was hastened with an increased rate of wound contraction. Glutathione (GSH) and ascorbic acid levels in the skin of streptozotocin-induced diabetic rats were higher in the PIC group as compared to control (Untreated) and collagen (Collagen Film--CF) treated groups. Superoxide dismutase (SOD) and catalase (CAT) activity was altered in all the groups. In vitro fibroblast cell culture studies suggest that PIC promotes fibroblast growth. Histological evaluation by haematoxylin-eosin and Masson's trichrome method revealed epithelialization, increased synthesis of collagen and activation of fibroblasts and mast cells in the PIC group. This study provides a rationale for the topical application of BioGHK incorporated collagen as a feasible and productive approach to support diabetic wound healing.