Impaired wound healing in diabetic patients is associated with deficiencies in the production of factors involved in cell proliferation and migration, such as vascular endothelial growth factor. However, it remains unclear how the transcriptional regulation of the genes encoding these factors is affected by the diabetic environment. Hypoxia‐inducible factor‐1α (Hif‐1α), the regulatory subunit of the Hif‐1 transcription factor, plays an important role in activating many of these genes. Therefore, we tested whether Hif‐1α function is impaired in the diabetic wound environment and whether restoring Hif‐1 function improves wound healing. Here, we show that Hif‐1α protein levels are dramatically reduced in wounds of leptin receptor‐deficient diabetic mice compared with nondiabetic littermates. Reduction in Hif‐1α levels results in decreased DNA‐binding activity and in decreased expression of several Hif‐1 target genes, including vascular endothelial growth factor, heme oxygenase‐1, and inducible nitric oxide synthase. Furthermore, we demonstrate that sustained expression of Hif‐1α in leptin receptor‐deficient diabetic wounds restores expression of these factors, enhances angiogenesis, and significantly accelerates wound healing. Taken together, these results suggest that Hif‐1α function plays a significant role in wound healing and reduced levels of Hif‐1α may contribute to impaired healing.