Patients with poorly controlled type 2 diabetes mellitus (T2DM) often experience delayed tooth extraction socket (TES) healing. Delayed healing is often associated with an aberrant inflammatory response orchestrated by either M1 pro-inflammatory or M2 anti-inflammatory macrophages. However, the precise mechanism for the attenuated TES healing remains unclear. Here we used diet-induced T2DM mice as a model to study TES. Compared with the control group, the T2DM group showed delayed TES healing and diminished expression of osteogenic and angiogenic genetic profiles. Meanwhile, we detected a more inflammatory profile, with more M1 macrophages and TNF-α expression and less M2 macrophages and PPARγ expression, in TES in the T2DM group when compared to control mice. In vitro co-culture models showed that M1 macrophages inhibited the osteogenic capacity of bone marrow stromal cells and the angiogenic capacity of endothelial cells while M2 macrophages showed an opposite effect. In addition, we constructed a gelatin/β-TCP scaffold with IL-4 to induce macrophage transformation towards M2 polarization. In vitro analyses of the hybrid scaffold revealed sustained release of IL-4 and a phenotype switch to M2 macrophages. Finally, we demonstrated that sustained IL-4 release significantly increased expression of osteogenic and angiogenic genetic profiles and improved TES healing in T2DM mice. Together, we report that increased M1 and decreased M2 macrophage polarization may be responsible for delayed TES healing in T2DM patients through abnormal expression of TNF-α and PPARγ. This imbalance negatively influences osteogenesis and angiogenesis, two of the most important biological factors in bone wound healing. Enhancing M2 macrophage polarization with IL-4 delivery system may represent a potential strategy for promoting the healing of TES in T2DM patients.