Objectives: This study aims to examine the association between state Medicaid coverage of podiatry services and the outcomes of beneficiaries with new diabetic foot ulcers (DFUs). Methods: Medicaid beneficiaries who developed a DFU between 2010 and 2015 were identified using the PearlDiver claims database. The states were categorized into covered states (CS) and non-covered states (NCS) based on podiatric coverage during the study period. The outcomes included major amputation, minor amputation, and hospitalization due to foot infection within 12 months of index diagnosis. Logistic regression was used to assess the association of state coverage type and outcomes, controlling for age, sex, and the Charlson Comorbidity Index (CCI). Results: Our study included 16,905 Medicaid beneficiaries who developed new DFUs: 14,748 in CS and 2157 in NCS. The overall major amputation rate was 2.6%. The risk of major amputation was 48% lower among Medicaid beneficiaries in CS (OR 0.52, 95% CI 0.31–0.90) than in NCS. The Medicaid beneficiaries in CS had a 24% lower risk of hospitalization for foot infection (OR 0.76, 95% CI 0.67–0.85) but had a 58% higher risk of minor amputation (OR 1.58, 95% CI 1.22–2.07) than in NCS. Conclusions: Medicaid coverage of podiatry services might be associated with lower rates of major amputation and reduced risk of hospitalization for foot infection.