Chronic diabetic wounds represent a major clinical burden and are strongly associated with peripheral neuropathy, yet the contribution of nerve-associated Schwann cells to impaired healing remains poorly defined. Here, we investigated Schwann cell dynamics in cutaneous wound repair using the db/db model of type 2 diabetes. Full-thickness excisional wounds in db/db mice exhibited delayed closure, reduced dermal and epidermal thickness, and diminished cellular proliferation compared to non diabetic controls. Diabetic wounds also demonstrated impaired re-innervation and a marked reduction in both total (S100B-positive) and dedifferentiated (p75NTR-positive) Schwann cells, including decreased Schwann cell proliferation. These findings indicate that diabetes disrupts the injury-induced Schwann cell response that is essential for normal repair. Transcriptomic analyses revealed that injury-activated Schwann cells upregulate multiple trophic factors, including oncostatin M (OSM), while single-cell RNA sequencing demonstrated broad expression of OSM receptors (Osmr and Il6st) across wound-resident keratinocytes, fibroblasts, and vascular-associated cells, suggesting widespread responsiveness to OSM signalling during repair. Therapeutic administration of OSM to diabetic wounds significantly accelerated closure, reduced wound width and area, and increased dermal and epidermal thickness. Mechanistically, OSM enhanced epidermal proliferation, angiogenesis, and cutaneous axon regeneration. Collectively, these data identify Schwann cell dysfunction as a contributor to impaired diabetic wound healing and demonstrate that augmenting a Schwann cell-derived paracrine signal can partially rescue key reparative processes. Our findings support a regulatory role for Schwann cells in coordinat