William Diamond was born in Baltimore, Maryland, in 1917. After receiving his B.A. (1937) and his Ph.D. in history (1942) from the Johns Hopkins University, Diamond worked with the U.S. Board of Economic Warfare and the U.S. Foreign Economic Administration. From 1944 to 1946, he served as an economist on US missions in Turkey and Czechoslovakia. He later served as Economic Advisor to the United Nations Relief and Rehabilitation Administration mission to Czechoslovakia and subsequently at its headquarters in London.

Diamond joined the Loan Department of the World Bank in 1947 and served there in a variety of posts. In 1947-1948, he took a leave of absence to be Deputy Director of the Foreign Trade Administration of Greece, an agency of the Royal Greek Government. In 1955, he transferred from the Loan Department to the staff of the new Economic Development Institute, the Bank's staff college on economic development, now called the World Bank Institute, where he served for three years. One outcome of this period was his book Development Banks, a basic text on that subject, which was translated into several languages. In 1959, he was on leave from the Bank to serve as Advisor to the Industrial Credit and Investment Corporation of India (ICICI), a development financing institution set up in 1955 with the advice and financial assistance of the World Bank.

After returning from India in 1960, Diamond was appointed Assistant Director of Operations, Western Hemisphere. In July 1962, he transferred to the International Finance Corporation (IFC) as Director of Development Bank Services and later became Director of the Development Finance Companies Department. That department was transferred from IFC to the IBRD on November 1, 1968, with Diamond remaining its director.

As part of the general reorganization of the Bank in November 1972, Diamond became director of the Country Programs Department for South Asia, responsible for the IBRD and IDA lending programs in Bangladesh, Burma, India, Nepal, Pakistan, and Sri Lanka. From December 1975 until August 1977, he was Special Assistant to the Vice President, Finance, with responsibility for activities in connection with the Fifth Replenishment of IDA. Thereafter, he returned to the Economic Development Institute as a Senior Fellow and retired in March 1978.

After retirement, Diamond served as a consultant for the IFC. Some of his consulting assignments were with the Societe Internatinonale Financiere pour les Investissements et le Developpement en Afrique (SIFIDA) and the Banco Portugues de Investimento SA (BPI).