Delay in wound healing is a diabetes mellites resulting disorder causing persistent microbial infections, pain, and poor quality of life. This disorder is treated by several strategies using natural biomaterials, growth factors and stem cells molded into various scaffolds which possess the potential to accelerate the closure of impaired diabetic wounds. In this study, we developed a hydrogel patch using chitosan (CS) and polyethylene glycol (PEG) with laden bone marrow-derived mesenchymal stem cells (BMSCs) that were pretreated with fibroblast growth factor 21 (FGF21). The developed hydrogel patches were characterized by scanning electron microscopy and fourier transform infrared (FTIR) spectroscopy. After studying the swelling behavior, growth factor (FGF21) was used to modulate BMSC in the hyperglycemic environment. Later, FGF21 treated BMSC were embedded in CS/PEG hydrogel patch and their wound closure effect was assessed in diabetic rats. The results showed that CS/PEG hydrogel patches have good biocompatibility and possess efficient BMSC recruiting properties. The application of CS/PEG hydrogel patches accelerated wound closure in diabetic rats as compared to the control groups. However, the use of FGF21 pretreated BMSCs laded CS/PEG hydrogel patches further increased the therapeutic efficacy of wound closure in diabetic rats. This study demonstrated that the application of a hydrogel patch of CS/PEG with FGF21 pretreated BMSCs improves diabetic wound healing, but further studies are needed on larger animals before the use of these dressings in clinical trials.