Diabetic foot ulcers (DFUs) are among the most common and debilitating complications of diabetes mellitus (DM), affecting approximately 15-25% of patients and contributing to over 85% of non-traumatic amputations. DFUs impose a substantial clinical and economic burden due to high recurrence rates, prolonged wound care, and frequent hospitalizations, accounting for billions in healthcare costs worldwide. The multifactorial pathophysiology of DFUs involves peripheral neuropathy, peripheral arterial disease, chronic inflammation, and impaired tissue regeneration. Recent studies underscore the importance of immune dysregulation-specifically macrophage polarization imbalance, regulatory T cell dysfunction, and neutrophil impairment-as central mechanisms in wound chronicity. These immune disruptions sustain a pro-inflammatory environment dominated by cytokines, such as TNF-α, IL-1β, and IL-6, which impair angiogenesis and delay repair. This review provides an updated synthesis of DFU pathogenesis, emphasizing immune dysfunction and its therapeutic implications. We examine emerging strategies in immunomodulation, regenerative medicine, and AI-based wound technologies, including SGLT2 inhibitors, biologics, stem cell therapies, and smart dressing systems. These approaches hold promise for accelerating healing, reducing amputation risk, and personalizing future DFU care.