Treatment of chronic wounds is challenging, and the development of different formulations based on insulin has shown efficacy due to their ability to regulate oxidative stress and inflammatory reactions. The formulation of insulin with polysaccharides in biohybrid hydrogel systems has the advantage of synergistically combining the bioactivity of the protein with the biocompatibility and hydrogel properties of polysaccharides. In this study, a hydrogel formulation containing insulin, chitosan, and hydroxypropyl methyl cellulose (Chi/HPMC/Ins) was prepared and characterized by FTIR, thermogravimetric, and gel point analyses. The in vitro cell viability and cell migration potential of the Chi/HPMC/Ins hydrogel were evaluated in human keratinocyte cells (HaCat) by MTT and wound scratch assay. The hydrogel was applied to excisional full-thickness wounds in diabetic mice for twenty days for in vivo studies. Cell viability studies indicated no cytotoxicity of the Chi/HPMC/Ins hydrogel. Moreover, the Chi/HPMC/Ins hydrogel promoted faster gap closure in the scratch assay. In vivo, the wounds treated with the Chi/HPMC/Ins hydrogel resulted in faster wound closure, formation of a more organized granulation tissue, and hair follicle regeneration. These results suggest that Chi/HPMC/Ins hydrogels might promote wound healing in vitro and in vivo and could be a new potential dressing for wound healing.