Aims To determine clinical outcomes and explore prognostic factors related to ulcer healing in people with a clinically infected diabetic foot ulcer. Methods This multicentre, prospective, observational study reviewed participants’ data at 12 months after culture of a diabetic foot ulcer requiring antibiotic therapy. From participants’ notes, we obtained information on the incidence of wound healing, ulcer recurrence, lower extremity amputation, lower extremity revascularization and death. We estimated the cumulative incidence of healing at 6 and 12 months, adjusted for lower extremity amputation and death using a competing risk analysis, and explored the relationship between baseline factors and healing incidence. Results In the first year after culture of the index ulcer, 45/299 participants (15.1%) had died. The ulcer had healed in 136 participants (45.5%), but recurred in 13 (9.6%). An ipsilateral lower extremity amputation was recorded in 52 (17.4%) and revascularization surgery in 18 participants (6.0%). Participants with an ulcer present for ~2 months or more had a lower incidence of healing (hazard ratio 0.55, 95% CI 0.39 to 0.77), as did those with a PEDIS (perfusion, extent, depth, infection, sensation) perfusion grade of ≥2 (hazard ratio 0.37, 95% CI 0.25 to 0.55). Participants with a single ulcer on their index foot had a higher incidence of healing than those with multiple ulcers (hazard ratio 1.90, 95% CI 1.18 to 3.06). Conclusions Clinical outcomes at 12 months for people with an infected diabetic foot ulcer are generally poor. Our data confirm the adverse prognostic effect of limb ischaemia, longer ulcer duration and the presence of multiple ulcers. What's new? This is the first prospective study to estimate the incidence of healing and prognostic factors associated with healing in people with a clinically infected diabetic foot ulcer, and specifically in the presence of competing risks of amputation and death. Outcomes for people with a clinically infected diabetic foot ulcer are poorer than previously thought; in the first year after presentation with an infected ulcer, 15.1% of our participants had died and 17.4% underwent at least partial lower extremity amputation. Healing incidence within 1 year was 44.5% (95% CI 38.9 to 50.1). Three key factors served as the best independent predictors of healing: PEDIS (perfusion, extent, depth, infection, sensation) perfusion grade; the absence of multiple foot ulcers; and shorter ulcer duration.