Re-epithelialization constitutes a critical stage in the intricate process of wound healing, yet its mechanisms in the context of diabetic wounds remain elusive. In this study, the role of the mesenchymal-epithelial transition (MET) vis-à-vis the epithelial-mesenchymal transition (EMT) of keratinocytes in diabetic wound re-epithelialization is investigated. The findings reveal an impediment in the MET process, rather than EMT, which significantly compromised re-epithelialization in diabetic wounds. Furthermore, Desmoplakin (DSP) gene expression, encoding a key desmosome protein, is down-regulated in diabetic rats. This down-regulation coincided with aberrant hypo-demethylation of the DSP promoter. The inhibition of DSP expression is linked to reduced occupancy of Ten-eleven translocation 3 (TET3) at the DSP promoter, consequently suppressing TET3-dependent DNA demethylation. Additionally, a novel lncRNA termed DSP-AS1is identified, which is antisense to DSP. Notably, DSP-AS1 expression is down-regulated in diabetic skin wounds, and it interacted with TET3, a DNA demethylase. Notably, DSP-AS1 is found to form R-loops, triple-stranded DNA:RNA hybrids, at the DSP promoter, facilitating TET3 localization to the DSP promoter. Collectively, the findings suggest that reduced R-loop formation by DSP-AS1 impairs DSP gene transcription by repressing TET3-mediated DNA demethylation. This disruption of the orchestrated re-epithelialization process contributes to refractory diabetic wound healing.