There has been much debate concerning the pathologic consequences of diabetes on the plantar fat pad and its subsequent association with the development of a foot ulcer. This review article documents two theories regarding pathophysiology in diabetic foot ulcer formation as they are related to the plantar fat pad and discusses current treatment options for this pathophysiological phenomenon. Traditionally, fat pad atrophy in diabetic patients was thought to result as an irregular arrangement of collagen fibrils within the septal walls as a result of glycation as well as diminishing adipocyte size due to thickened septal walls. Contrary to this traditional theory, a model depicting distal fat pad migration from under the metatarsal heads has been described in the diabetic patient. Such pad migration renders the metatarsal heads vulnerable to increased pressure, which, in turn, predisposes to foot ulceration. This migratory fat pad theory plays a significant role in approaches to the prevention of diabetic foot ulceration and subsequent amputation. Various methods of fat pad supplementation and claw toe management are impacted by the pathophysiological changes described and new avenues of therapy may be based on these changes.