A diabetic microenvironment primes neutrophils for NETosis, a process of formation of neutrophil extracellular traps (NETs) that further degrades the neutrophils and makes them unavailable for the early-stage inflammatory processes. Mechanistically, simple modification of arginine residues of histones to citrulline by peptidylarginine deiminase (PAD4) enzyme is considered to be a prerequisite for NETosis. In fact, under diabetic conditions, an increase in PAD4-mediated NET formation is considered as one of the reasons for impaired wound healing. Therefore, in the present work, an alginate-GelMa (generally recognized as safe category by FDA, USA) based hydrogel scaffold containing a tripeptide (Thr-Asp-F-amidine) that inhibits PAD4 is developed, based on the hypothesis that inhibiting PAD4 enzyme might offer a way to enhance wound healing under diabetic conditions. The scaffolds are thoroughly characterized for their physicochemical and biological properties. Furthermore, neutrophil-scaffold interactions in terms of NETosis ability and release of other related biomarkers are studied. The wound healing ability is evaluated by a cell migration assay. In vivo wound healing efficacy of the developed scaffolds is demonstrated using a diabetic rat model. The results suggest a reduction in NETosis in the presence of a PAD4 inhibitor. Thus, the study demonstrates a novel scaffold system to deliver the PAD4 inhibitor that can be used to modulate NETosis and improve wound healing.