Impaired wound healing is an important clinical problem in diabetes and results in slow wound healing which may lead to infection, sepsis, gangrene and even amputations. In the present study, polymer (collagen and arginine) based dressings were prepared to be applied as scaffold for the control release of Lupeol (Lu), a triterpeniod that acts as an inflammatory modulator in wound healing. The activity of Lu–loaded polymer matrices to treat wounds in streptozotocin diabetic induced rat was evaluated. There was a delay in wound healing in diabetic rats as compared to non-diabetic rats. The dressing exhibited potent wound healing activity as indication by the wound contraction in the excision wound model. Lu–loaded polymer dressings make faster healing (21% wound area reduction) in the initial phase of wound healing in diabetic rat. Prepared system also significantly reduced inflammatory cytokine expression namely, TNF-α and IL-1β and decreased the inflammatory infiltrate post-wounding. The contents of hydroxyproline and hexosamine also correlated with the observed healing pattern. These findings were supported by the histopathological characteristics of healed wound sections, as greater tissue regeneration, more fibroblasts, and angiogenesis were observed in the Lu–loaded polymer matrices-treated group.  These results suggest that polymer-based dressings can be an effective support for Lupeol release into diabetic wound enhancing the healing process.