Diamond has superior characteristics, such as high hardness, high isolation, and high breakdown voltage, but it is also difficult to manufacture for industrial application. Because diamond is a nonconductor, the usual electrical discharge machining (EDM) method cannot be used. Hence, this study uses the plating nickel to keep the diamond powder as the composite electroplated layer of nickel-diamond powder. The variation of the composite layer and the diamond particle erosion characteristic after arc discharge can be realized by single-arc discharge. By the result of experiment, it can be known that the erosion area will be enlarged when the diamond particle is near to central erosion area, because the diamond that has good heat stability makes plasma to spread. The erosion area will be decreased when the diamond particle is near to edge of erosion area, because it stops the melted nickel to spread. The surface of diamond particle is broken slightly that the particle become more spherical and has some nickel remain on it when pulse voltage is less than 300 volt or the diamond particle is near to edge of erosion area. The surface of diamond particle is broken seriously that the particle is cracked to pieces when pulse voltage is more than 300 volt or the diamond particle is near to central erosion area.