Treating chronic wounds is a global challenge. In diabetes mellitus cases, long-time and excess inflammatory responses at the injury site may delay the healing of intractable wounds. Macrophage polarization (M1/M2 types) can be closely associated with inflammatory factor generation during wound healing. Quercetin (QCT) is an efficient agent against oxidation and fibrosis that promotes wound healing. It can also inhibit inflammatory responses by regulating M1-to-M2 macrophage polarization. However, its limited solubility, low bioavailability, and hydrophobicity are the main issues restricting its applicability in wound healing. The small intestinal submucosa (SIS) has also been widely studied for treating acute/chronic wounds. It is also being extensively researched as a suitable carrier for tissue regeneration. As an extracellular matrix, SIS can support angiogenesis, cell migration, and proliferation, offering growth factors involved in tissue formation signaling and assisting wound healing. We developed a series of promising biosafe novel diabetic wound repair hydrogel wound dressings with several effects, including self-healing properties, water absorption, and immunomodulatory effects. A full-thickness wound diabetic rat model was constructed for in vivo assessment of QCT@SIS hydrogel, in which hydrogels achieved a markedly increased wound repair rate. Their effect was determined by the promotion of the wound healing process, the thickness of granulation tissue, vascularization, and macrophage polarization during wound healing. At the same time, we injected the hydrogel subcutaneously into healthy rats to perform histological analyses of sections of the heart, spleen, liver, kidney, and lung. We then tested the biochemical index levels in serum to determine the biological safety of the QCT@SIS hydrogel. In this study, the developed SIS showed convergence of biological, mechanical, and wound-healing capabilities. Here, we focused on constructing a self-healing, water-absorbable, immunomodulatory, and biocompatible hydrogel as a synergistic treatment paradigm for diabetic wounds by gelling the SIS and loading QCT for slow drug release.