Diamond was born in Brooklyn, the son of Allison, an astrologer, and Bob Diamond, a stage manager and director of shows such as The Joe Franklin Show. He was raised in Manhattan and attended the Trinity School.
Diamond attended the University of North Carolina at Chapel Hill for two years, then studied acting at the Juilliard School, where he was a member of the Drama Division's Group 20 (1987–1991).
As a child, Diamond had small parts in the ABC Afterschool Special Sara's Summer of the Swans (1974) and the film Two Minute Warning (1976). His early roles as an adult included guest starring on Law & Order and Class of '96, and such films as Memphis Belle (1990), Clear and Present Danger (1994) and Her Hidden Truth (1995).

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