When carbon or carbon bearing materials are exposed to high temperature and pressure for an extended period of time, diamonds are formed. Deep within the Earth, there are areas that are thermodynamically favorable for the formation of diamonds, due to the high temperature and pressure found in these regions. Starting approximately 90 miles under the continental crust, with a pressure of 5 gigapascals and a temperature of 1200 degrees Celsius, diamonds are formed. Diamonds tend to grow larger under oceanic crust, after long periods of exposure to the high pressures and temperatures found there.

There are both inorganic and organic carbon found in diamonds. Diamonds have different names depending on the type of carbon found in them. Diamonds formed from inorganic carbon found in the Earth's mantle are called harzburgitic, whereas eclogitic diamonds are formed from organic carbon from detritus that has been pushed down from the surface of the Earth's crust. The diamonds that are brought to the surface of the Earth are older than most, ranging from 1-3.3 billion years old. Any natural, high pressure, high temperature event can cause diamonds to form.

Micro-diamonds, which are very small diamonds, have been found in craters where meteors struck the earth and created areas of high temperature and pressure. These small diamonds are used to indicate sites where there was once a meteorite impact. In the oldest regions of the Earth's crust, volcanic pipes bearing diamonds can commonly be found. Volcanic pipes are found below small surface volcanic craters, and contain material that was brought towards the surface during volcanic activity, yet never erupted. The magma does not contain diamonds, yet transports the rocks and materials to the surface.

Diamonds that are brought to the Earth's surface by magma in a volcanic pipe can erode out and be dispersed over a very large area. A primary source of diamonds is the term used to describe a volcanic pipe containing diamonds. A secondary source occurs where a number of diamonds accumulate due to the activity of water or weather. Diamonds have been found in glacial deposits, yet are not found in large numbers, and are not considered a potential commercial source of the gem. It is also possible for diamonds to be forced to the surface after two continental plates collide, although it is rare.