To overcome the challenges of poor wound diagnosis and limited clinical efficacy of current wound management, wound dressing materials with the aim of monitoring various biomarkers vital to the wound healing process such as temperature, pH, glucose concentration, and reactive oxygen species (ROS) and improving the therapeutic outcomes have been developed. These innovative theranostic dressings are smartly engineered using stimuli-responsive biomaterials to monitor and regulate local microenvironments and deliver cargos to the wound sites in a timely and effective manner. This review provides an overview of recent advances in novel theranostics for wound monitoring and therapy as well as giving insights into the future treatment of wounds via smart design of theranostic materials.