Diabetic wounds healing is often a slow process, characterized by hyperglycemia, elevated oxidative stress, bacterial infections, and persistent inflammation, all of which severely impede the healing of diabetic wounds. This review focuses on the development of hydrogels derived from natural polymers to facilitate diabetic wound healing. We discuss the primary sources of cellulose, chitosan, hyaluronic acid, sodium alginate, collagen, and gelatin and their advantages in the preparation of hydrogels. Based on the microenvironment of diabetic wounds, i.e., hyperglycemia, increased oxidative stress, and persistent inflammation, the application of multifunctional hydrogels in promoting diabetic wounds, including stimulus responsiveness, injection self-healing, antibacterial, antioxidant, anti-inflammatory, and synergistic effects, is discussed. Finally, we address the main challenges and future perspectives of multifunctional hydrogels based on natural polymers in the treatment of diabetic wounds.