Diabetic foot ulcer originates due to peripheral neuropathy, immunosuppression, resistance to infections, and peripheral arterial disease. The probability of lower limb amputation is increased by 2-4 times in patients with poor glycemic control. Classically, diabetic foot ulcer has been managed by synthetic antibiotics and wound dressings with or without healing promoters. However, success rate is minimal and have multiple side effects. Therefore, bioactive secondary metabolites like quercetin have been extensively explored for proper care of chronic wound like diabetic foot ulcer. Quercetin has exhibited excellent antioxidant, anti-inflammatory, wound healing, and anti-microbial properties in recent preclinical studies. However, its poor aqueous solubility (0.48 mu g/ml), membrane permeability (1.8), and high gut wall metabolism (93.3%) reduces its bioavailability to similar to 5%. In the past two decades, nanoencapsulated quercetin formulations, namely, lipid-based nanocarriers, nanocrystals, polymeric, mesoporous silica nanoparticles, nanofibers, and scaffolds, have been successfully explored to overcome the shortcomings of quercetin and improve its efficacy in diabetic foot ulcer treatment. In the present review, an in-depth understanding of pathophysiology and mechanistic role of quercetin in the healing of diabetic foot ulcer is presented. Furthermore, a crisp discussion on the physiochemical properties and pharmacokinetic parameters is also given for designing an efficient colloidal-based topical delivery system. Additionally, preclinical studies conducted in the past two decades for improving the permeability and retention of quercetin in the skin and the management of diabetic foot ulcer have also been critically analyzed. Therefore, this comprehensive review will expedite the pre-clinical to clinical translation of quercetin in the near future.