Impaired wound healing is a well-documented phenomenon in diabetes mellitus, yet little is known of the fundamental cause of this pathology. This study examined the effects of streptozotocin (STZ)-induced diabetes on the healing process using three wound models: (i) a linear skin incision (tensile strength), (ii) subcutaneously implanted polyvinyl alcohol sponge PVAs (collagen deposition), and (iii) stainless steel mesh chamber (TGF-β, IGF-I and its binding proteins, extracellular matrix remodeling enzymes). RIA specific for IGF-I revealed that diabetes induced a 42% (wound fluid) and a 48% (serum) reduction in IGF-I levels. IGF-II western ligand blots found that diabetes produced a marked reduction in the level of a wound fluid 46 kDa IGF binding proteins. A proliferation-based bioassay indicates that TGF-β level is also reduced in diabetic wound fluid (55%). Diabetes of graded metabolic severity induced by variable doses of STZ (25 mg-200 mg/kg) showed stepwise reduction in wound tensile strength and PVAs collagen deposition. In contrast, zymographic analysis of extracellular matrix proteases revealed that the diabetic wound fluid contains increased levels of 21, 69, and 72 kDa gelatinases. A single dose of TGF-β (2 μg) in a collagen vehicle partially reversed the diabetes-related decrease in the tensile strength of standardized incisions. These data support the premise that wound-healing impairment in diabetes is due, at least in part, to a deficiency in growth factor activity within the wound environment.