Neurofibromas, rare benign tumors of the peripheral nerve sheath, present diagnostic challenges, particularly in diabetic patients with toe ulcers. This case involves a 55-year-old female with type 2 diabetes mellitus who developed an enlarging ulcer on her right second toe. The initial evaluation suggested a diabetic ulcer; however, advanced imaging revealed a mass-like lesion. Partial excision and biopsy confirmed a neurofibroma with spindle cells within the myxoid stroma and S100 protein expression. One month later, total excision and Z-plasty reconstruction were performed under general anesthesia. The patient’s postoperative recovery was uneventful, and the patient was discharged without complications. Follow-up revealed successful healing with no recurrence or functional issues. This case highlights the importance of considering neurofibromas in the differential diagnosis of diabetic toe ulcers to avoid misdiagnosis and ensure appropriate management.