Diabetes wounds take longer to heal due to extended inflammation, decreased angiogenesis, bacterial infection, and oxidative stress. These factors underscore the need for biocompatible and multifunctional dressings with appropriate physicochemical and swelling properties to accelerate wound healing. Herein, insulin (Ins)-loaded, and silver (Ag) coated mesoporous polydopamine (mPD) nanoparticles were synthesized (Ag@Ins-mPD). The nanoparticles were dispersed into polycaprolactone/methacrylated hyaluronate aldehyde dispersion, electrospun to form nanofibers, and then photochemically crosslinked to form a fibrous hydrogel. The nanoparticle, fibrous hydrogel, and nanoparticle-reinforced fibrous hydrogel were characterized for their morphological, mechanical, physicochemical, swelling, drug-release, antibacterial, antioxidant, and cytocompatibility properties. The diabetic wound reconstruction potential of nanoparticle-reinforced fibrous hydrogel was studied using BALB/c mice. The results indicated that Ins-mPD acted as a reductant to synthesize Ag nanoparticles on their surface, held antibacterial and antioxidant potential, and their mesoporous properties are crucial for insulin loading and sustained release. The nanoparticle-reinforced scaffolds were uniform in architecture, porous, mechanically stable, showed good swelling, and possessed superior antibacterial, and cell-responsive properties. Furthermore, the designed fibrous hydrogel scaffold demonstrated good angiogenic, anti-inflammatory, increased collagen deposition, and faster wound repair capabilities, therefore, it could be used as a potential candidate for diabetic wound treatment.