Wound healing is one of the major global health concerns in diabetic patients. Simvastatin (SMV) is a poorly soluble oral cholesterol-lowering drug that may aid diabetic wound healing. In the current study, a thixotropic peptide hydrogel of Fmoc-diphenylalanine (FmocFF) containing SMV was designed to accelerate skin wound healing effectively and safely in diabetic mice. FmocFF hydrogels were prepared at various concentrations by using the solvent-triggering technique and characterized by spectroscopic methods such as attenuated total reflection Fourier transform infrared (FT-IR) spectroscopy and fluorimetry. Mechanical behaviors were explored by oscillatory rheology. In model mice, the regenerative potential of the FmocFF-SMV hydrogel was evaluated in terms of wound contraction and closure, tissue regeneration, acute and chronic inflammation, granulation, and re-epithelization. The results showed that FmocFF-SMV hydrogels had an entangled nanofibrous microstructure and shear-thinning characteristics. FmocFF-SMV demonstrated a sustained drug release over 7 days. Compared to the unloaded FmocFF hydrogel, treatment with FmocFF-SMV led to superior diabetic wound recovery and reduced inflammation. Therefore, the utilization of the sustained-release FmocFF-SMV hydrogel formulation could become an attractive choice for topical wound therapy in diabetes patients.