Diamond Ore

Diamond ore is generally considered to be the most valuable and elusive block in the game. It can be found generally in a vein of 4 blocks, and you may often find lava in its proximity and vice versa. This, however, may only occur because of the depth at which it is found. It shows up at elevations ranging from 1 to 19 blocks above the bottom of the map (for comparison, sea level is around 64 blocks above the bottom of the map). Below elevation 18, it occurs in roughly 0.08% of rock. This means that you must check 867 blocks below elevation 18 to have a 50% chance of finding at least one diamond ore. It can be mined for a diamond gem using an iron or diamond pickaxe. The diamond gems can be used right away in a Crafting Table to craft diamond tools, weapons and armor, which are currently the most durable in the game. These, along with coal, flint, Lapis Lazuli, and redstone ore, do not require any smelting and can be used immediately. You can also create diamond blocks by crafting nine diamond gems together in a 3x3 square using the workbench.

It cannot be found or placed in Classic as of version 0.30 and it drops 1 Diamond (Gem) in Indev, Infdev, Alpha and Beta.

Trivia
it is possible in multiplayer for a ore spawning gltch where large clumps of diamond and gold can be found
 * When diamond was first introduced, it was called emerald.
 * If you were to obtain diamond ore, you can smelt it into diamond gems.