Diabetes can lead to a variety of complications, such as chronic wound (diabetic foot), which is one of the important causes of death for patients with diabetes. Unfavorable factors such as high blood glucose, high level of oxidative stress and inflammation, and susceptibility to infection lead to difficult healing and even worsening of diabetic chronic wounds. Due to the advantages of high water content, good biocompatibility, and tunable physicochemical properties, the hydrogels have become hot-spot materials in wound dressing research. Compared with the traditional dressings such as gauze, the hydrogel dressings can provide a moist environment that is beneficial for wound healing. By loading of bioactive components and modulation of compositions and structures of hydrogels, the hydrogel dressings can be endowed with excellent tissue adhesion, antibacterial ability, anti-oxidation, and inflammation regulation effect, etc., and thus show great prospects in wound dressing applications. Based on the characteristics of hydrogel materials and microenvironment of diabetic chronic wound, this review summarized the research advances on new multifunctional hydrogel dressings for the treatment of diabetic chronic wounds in recent years, and discussed the drawbacks of current hydrogel dressings with prospects proposed.