Background: Diabetic foot ulcers (DFUs) represent a significant challenge in managing diabetes, leading to higher patient complications and increased healthcare costs. Traditional approaches, such as manual wound assessment and diagnostic tool usage, often require significant resources, including skilled clinicians, specialized equipment, and extensive time. Artificial intelligence (AI) and generative AI offer promising solutions for improving DFU management. This study systematically reviews the role of AI in DFU classification, prediction, segmentation, and detection. Furthermore, it highlights the role of generative AI in overcoming data scarcity and potential of AI-based smartphone applications for remote monitoring and diagnosis. Methods: A systematic literature review was conducted following the PRISMA guidelines. Relevant studies published between 2020 and 2025 were identified from databases including PubMed, IEEE Xplore, Scopus, and Web of Science. The review focused on AI and generative AI applications in DFU and excluded non-DFU-related medical imaging articles. Results: This study indicates that AI-powered models have significantly improved DFU classification accuracy, early detection, and predictive modeling. Generative AI techniques, such as GANs and diffusion models, have demonstrated potential in addressing dataset limitations by generating synthetic DFU images. Additionally, AI-powered smartphone applications provide cost-effective solutions for DFU monitoring, potentially improving diagnosis. Conclusions: AI and generative AI are transforming DFU management by enhancing diagnostic accuracy and predictive capabilities. Future research should prioritize explainable AI frameworks and diverse datasets for AI-driven healthcare solutions to facilitate broader clinical adoption.