It is thought that Mrs. Dolly Kiger named the town in 1874 as well as the craters located northwest of town, after the diamond-shaped brand used by the McCoy Ranch.
The post office in the Diamond area has been moved many times since first established in 1887. A.T. Clark set up the first post office in his store ON April 23, 1887, approximately three miles west of the present town of Diamond. For unknown reasons, it was subsequently housed in a new structure constructed by Marion Horton and George Smyth in about 1897. One source indicates the post office has had over seventeen postmasters and assistant postmasters.
At the turn of the century, Diamond was growing into a major merchandising outlet for ranchers, sheepmen, and travelers. It was a common sight to observe camp tenders making large purchases in Diamond to restock the solitary sheepherders. Often the herders, as well as camp tenders, spent days and sometimes weeks at Hotel Diamond during periodic rest periods. The two stores in Diamond were centers of much activity, and of course, the saloon, with its special charm for people accustomed to solitary living, attracted many clients. At its' zenith, Diamond had a population of about fifty people.