Although impaired keratinocyte migration is a recognized hallmark of chronic wounds, the molecular mechanisms underpinning impaired cell movement are poorly understood. Here, we demonstrate that both diabetic foot ulcers (DFUs) and venous leg ulcers (VLUs) exhibit global deregulation of cytoskeletal organization in genomic comparison to normal skin and acute wounds. Interestingly, we found that DFUs and VLUs exhibited downregulation of ArhGAP35, which serves both as an inactivator of RhoA and as a glucocorticoid repressor. Since chronic wounds exhibit elevated levels of cortisol and caveolin-1 (Cav1), we posited that observed elevation of Cav1 expression may contribute to impaired actin-cytoskeletal signaling, manifesting in aberrant keratinocyte migration. We showed that Cav1 indeed antagonizes ArhGAP35, resulting in increased activation of RhoA and diminished activation of Cdc42, which can be rescued by Cav1 disruption. Furthermore, we demonstrate that both inducible keratinocyte specific Cav1 knockout mice, and MβCD treated diabetic mice, exhibit accelerated wound closure. Taken together, our findings provide a previously unreported mechanism by which Cav1-mediated cytoskeletal organization prevents wound closure in patients with chronic wounds.