The endogenous small GTPase, Rac1, plays a critical role during normal skin wound healing. It remains to be determined whether endogenous Rac1 can be appropriately activated in chronic wounds; if not, whether exogenous Rac1 has therapeutic effects on wound healing. Here we show that Rac1 protein levels were lower in wounds of db/db diabetic mice than wounds in wild type mice during the healing process. To assess the therapeutic potential of exogenous Rac1 in wound healing, we produced a Tat-Rac1 fusion protein that enters into cells through protein transduction. Tat-Rac1 increased proliferation and migration of keratinocytes and dermal fibroblasts in vitro. Topical application of Tat-Rac1 accelerated cutaneous wound closure in vivo in db/db mice as well as wild type mice. Further analyses revealed that Tat-Rac1 had faster re-epithelialization, higher keratinocyte proliferation and migration without an earlier onset of myofibroblast activation than vehicle treated wounds. Tat-Rac1 also reduced inflammation in wounds. Our findings revealed the failure of diabetic wounds to elevate Rac1 expression and suggested a therapeutic strategy utilizing a Rac1-based biologic to compensate for this defect thereby promoting wound healing.