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Diamonds occur most often as euhedral or rounded octahedra and twinned octahedra known as macles. As diamond's crystal structure has a cubic arrangement of the atoms, they have many facets that belong to a cube, octahedron, rhombicosidodecahedron, tetrakis hexahedron or disdyakis dodecahedron. The crystals can have rounded off and unexpressive edges and can be elongated. Sometimes they are found grown together or form double "twinned" crystals grown together at the surfaces of the octahedron. This is all due to the conditions in which they form. Diamonds are commonly found coated in nyf, an opaque gum-like skin.

Diamonds can also form in other natural high-pressure, high-temperature events. Very small diamonds, known as microdiamonds or nanodiamonds, have been found in impact craters where meteors strike the Earth and create shock zones of high pressure and temperature where diamond formation can occur. Microdiamonds are now used as one indicator of ancient meteorite impact sites.

Diamond-bearing rock is forced close to the surface through deep-origin volcanic eruptions. The magma for such a volcano must originate at a depth where diamonds can be formed, 90 miles (150 km) deep or more (three times or more the depth of source magma for most volcanoes); this is a relatively rare occurrence. Below these typically small surface volcanic craters are formations known as volcanic pipes, which contain material that was pushed toward the surface of the earth by volcanic action, but did not erupt before the volcanic activity ceased. Diamond-bearing volcanic pipes are most commonly found in the oldest regions of continental crust, which relates to the fact that these areas are the coolest portions of the earth's crust, and therefore diamonds can form at the shallowest depths.

The magma in such volcanic pipes is usually one of two characteristic types, which cool into igneous rock known as either kimberlite or lamproite. The magma itself does not contain diamond; instead, it acts as an elevator that carries deep-formed rocks and material upward. These rocks are characteristically rich in magnesium bearing olivine, pyroxene, and amphibole minerals which are usually altered to serpentine under near surface conditions. Certain indicator minerals typically occur within diamondiferous kimberlites and are used as mineralogic tracers in the search for diamond deposits by prospectors. These minerals are rich in chromium (Cr) or titanium (Ti), elements which impart bright colors to the minerals. The most common indicator minerals are chromian garnets (usually bright red Cr-pyrope, and occasionally green ugrandite-series garnets), eclogitic garnets, orange Ti-pyrope, red high chromian spinels, dark chromite, bright green Cr-diopside, glassy green olivine, black picroilmenite, and magnetite. Kimberlite deposits are known as blue ground for the deeper serpentinized part of the deposits, or as yellow ground for the near surface smectite clay and carbonate weathered and oxidized portion.

Once diamonds have been forced to the surface by magma in a volcanic pipe, they may erode out and be distributed over a large area. A volcanic pipe containing diamonds is known as a primary source of diamonds. Secondary sources of diamonds include all areas where a significant number of diamonds, eroded out of their kimberlite or lamproite matrix, accumulate because of water or weather action. These include alluvial deposits and deposits along existing and ancient shorelines, where loose diamonds tend to accumulate because of their approximate size and density. Diamonds have also rarely been found in deposits left behind by glaciers (notably in Wisconsin and Indiana); however, in contrast to alluvial deposits, glacial deposits are not known to be of significant concentration and are therefore not viable commercial sources of diamond.

Diamonds can also be brought to the surface through certain processes which may occur when two continental plates collide forcefully, although this phenomenon is less understood and currently assumed to be uncommon.

The use of diamonds as gemstones of decorative value is the most familiar use to most people today, and is also the earliest use, with decorative use of diamonds stretching back into antiquity.