Globally, approximately 18.6 million individuals develop diabetic foot ulcers each year, with an estimated 50–60% of these cases subsequently becoming infected. Diabetes-related foot infections (DFI) are a common and serious complication for patients with diabetes, often resulting in gangrene, lower extremity amputation and eventually death. Multidrug resistance among DFI pathogens aggravates treatment failure, driving up healthcare costs and morbidity. Addressing this multifaceted challenge necessitates the development of novel, synergistic, and innovative therapeutic strategies. Plasma-activated water (PAW) is an emerging solution, produced by treating water with cold plasma; an ionized gas that generates a complex mixture of reactive oxygen and nitrogen species. PAW elicits potent broad-spectrum antimicrobial and antibiofilm activity against a wide range of pathogens implicated in chronic wound infections, including DFI. Moreover, PAW has been shown to accelerate wound healing through modulating immune cell activity and promoting epithelial cell proliferation and migration into wounds. In this review, we summarize: (i) the prevalence and recurrence of DFIs, (ii) methods for PAW generation and its physicochemical properties, (iii) the antimicrobial and antibiofilm efficacy of PAW against clinically relevant DFI pathogens, (iv) its effects on cellular behavior, including immune modulation and promotion of epithelial regeneration, (v) PAW as a stand-alone or synergistic therapy (vi) current limitations in PAW application, including standardization, delivery, and regulatory hurdles. Together, this rationale highlights the notion that PAW holds significant potential as a next-generation therapeutic approach for DFIs and other chronic wounds.