Four main characteristics, known informally as the “Four Cs”, are commonly used as the basic descriptors of diamonds: these are carat, cut, color, and clarity.

Most diamonds are traded based on single values for each of the four Cs; for example knowing that a diamond is rated as 1.5 carats (300 mg), VS2 clarity, F color, excellent cut round brilliant, is enough to reasonably establish an expected price range. More detailed information from within each characteristic is used to determine actual market value for individual stones.

Other characteristics not described by the four Cs influence the value or appearance of a gem diamond. These characteristics include physical characteristics such as the presence of fluorescence, as well as data on a diamond's history including its source and which gemological institute performed evaluation services on the diamond. Cleanliness also dramatically affects a diamond's beauty.

Carat

The carat weight measures the mass of a diamond. One carat is defined as 200 milligrams (about 0.007 ounce avoirdupois). The point unit—equal to one one-hundredth of a carat (0.01 carat, or 2 mg)—is commonly used for diamonds of less than one carat. All else being equal, the price per carat increases with carat weight, since larger diamonds are both rarer and more desirable for use as gemstones.

The price per carat does not increase smoothly with increasing size. Instead, there are sharp jumps around milestone carat weights, as demand is much higher for diamonds weighing just more than a milestone than for those weighing just less. As an example, a 0.95 carat diamond may have a significantly lower price per carat than a comparable 1.05 carat diamond, because of differences in demand.

Total carat weight (t.c.w.) is a phrase used to describe the total mass of diamonds or other gemstone in a piece of jewelry, when more than one gemstone is used. Diamond solitaire earrings, for example, are usually quoted in t.c.w. when placed for sale, indicating the mass of the diamonds in both earrings and not each individual diamond. T.c.w. is also widely used for diamond necklaces, bracelets and other similar jewelry pieces.

Clarity

Clarity is a measure of internal defects of a diamond called inclusions. Inclusions may be crystals of a foreign material or another diamond crystal, or structural imperfections such as tiny cracks that can appear whitish or cloudy. The number, size, color, relative location, orientation, and visibility of inclusions can all affect the relative clarity of a diamond. The Gemological Institute of America (GIA) and other organizations have developed systems to grade clarity, which are based on those inclusions which are visible to a trained professional when a diamond is viewed under 10x magnification.

Diamonds become increasingly rare when considering higher clarity gradings. Only about 20 percent of all diamonds mined have a clarity rating high enough for the diamond to be considered appropriate for use as a gemstone; the other 80 percent are relegated to industrial use. Of that top 20 percent, a significant portion contains one or more visible inclusions. Those that do not have a visible inclusion are known as "eye-clean" and are preferred by most buyers, although visible inclusions can sometimes be hidden under the setting in a piece of jewelry.

Most inclusions present in gem-quality diamonds do not affect the diamonds' performance or structural integrity. However, large clouds can affect a diamond's ability to transmit and scatter light. Large cracks close to or breaking the surface may reduce a diamond's resistance to fracture.

Diamonds are graded by the major societies on a scale ranging from flawless to imperfect.

Color

Jewelers sometimes set diamonds in groups of similar colors. The Hope Diamond. Its deep blue coloration is caused by trace amounts of boron in the diamond

A chemically pure and structurally perfect diamond is perfectly transparent with no hue, or color. However, in reality almost no gem-sized natural diamonds are absolutely perfect. The color of a diamond may be affected by chemical impurities and/or structural defects in the crystal lattice. Depending on the hue and intensity of a diamond's coloration, a diamond's color can either detract from or enhance its value. For example, most white diamonds are discounted in price as more yellow hue is detectable, while intense pink or blue diamonds (such as the Hope Diamond) can be dramatically more valuable. The Aurora Diamond Collection displays a spectacular array of naturally colored diamonds, and is a good source of information on the topic of colored diamonds.

Most diamonds used as gemstones are basically transparent with little tint, or white diamonds. The most common impurity, nitrogen, replaces a small proportion of carbon atoms in a diamond's structure and causes a yellowish to brownish tint. This effect is present in almost all white diamonds; in only the rarest diamonds is the coloration due to this effect undetectable. The GIA has developed a rating system for color in white diamonds, from "D" to "Z" (with D being "colorless" and Z having a bright yellow coloration), which has been widely adopted in the industry and is universally recognized, superseding several older systems once used in different countries. The GIA system uses a benchmark set of natural diamonds of known color grade, along with standardized and carefully controlled lighting conditions. Precision-crafted cubic zirconia master sets are sometimes used in the trade, however the GIA has found these sets to be inaccurate.  Diamonds with higher color grades are rarer, in higher demand, and therefore more expensive, than lower color grades. Oddly enough, diamonds graded Z are also rare, and the bright yellow color is also highly valued. Diamonds graded D-F are considered "colorless", G-J are considered "near-colorless", K-M are "slightly colored". N-Y usually appear light yellow or brown.

In contrast to yellow or brown hues, diamonds of other colors are more rare and valuable. While even a pale pink or blue hue may increase the value of a diamond, more intense coloration is usually considered more desirable and commands the highest prices. A variety of impurities and structural imperfections cause different colors in diamonds, including yellow, pink, blue, red, green, brown, and other hues. Diamonds with unusual or intense coloration are sometimes labeled "fancy" by the diamond industry. Intense yellow coloration is considered one of the fancy colors, and is separate from the color grades of white diamonds. Gemologists have developed rating systems for fancy colored diamonds, but they are not in common use because of the relative rarity of colored diamonds.

Cut

Diamond cutting is the art and science of creating a gem-quality diamond out of mined rough.  Although “cut” and “shape” are technically different, many refer to the shape of a diamond as its cut.

The cut of a diamond describes the manner in which a diamond has been shaped and polished from its beginning form as a rough stone to its final gem proportions. The cut of a diamond describes the quality of workmanship and the angles to which a diamond is cut.

There are mathematical guidelines for the angles and length ratios at which the diamond is supposed to be cut in order to reflect the maximum amount of light. Round brilliant diamonds, the most common, are guided by these specific guidelines, though fancy cut stones are not able to be as accurately guided by mathematical specifics.

The techniques for cutting diamonds have been developed over hundreds of years, with perhaps the greatest achievements made in 1919 by mathematician and gem enthusiast Marcel Tolkowsky. He developed the round brilliant cut by calculating the ideal shape to return and scatter light when a diamond is viewed from above. The modern round brilliant has 57 facets (polished faces), counting 33 on the crown (the top half), and 24 on the pavilion (the lower half). The girdle is the thin middle part. The function of the crown is to diffuse light into various colors and the pavilion's function to reflect light back through the top of the diamond.

The culet is the tiny point or facet at the bottom of the diamond. This should be a negligible diameter, otherwise light leaks out of the bottom. Tolkowsky's ideal dimensions did not include a girdle. However, a thin girdle is required in reality in order to prevent the diamond from easily chipping in the setting. A normal girdle should be about 1%–2% of the overall diameter.

Diamonds do not show all of their beauty as rough stones; instead, they must be cut and polished to exhibit the characteristic fire and brilliance that diamond gemstones are known for. Diamonds are cut into a variety of shapes that are generally designed to accentuate these features.

Diamonds which are not cut to the specifications of Tolkowsky's round brilliant shape (or subsequent variations) are known as "fancy cuts." Popular fancy cuts include the baguette (from the French, meaning rod or loaf of bread), marquise, princess cut (square outline), heart, briolette (a form of the rose cut), and pear cuts. Newer cuts that have been introduced into the jewelry industry are the "cushion" "radiant"(similar to princess cuts, but with rounded edges instead of square edges) and "Asscher" cuts. Many fancy colored diamonds are now being cut according to these new styles. Generally speaking, these "fancy cuts" are not held to the same strict standards as Tolkowsky-derived round brilliants and there are less specific mathematical guidelines of angles which determine a well-cut stone. Cuts are influenced heavily by fashion: the baguette cut—which accentuates a diamond's luster and downplays its fire—was all the rage during the Art Deco period, whereas the princess cut cut—which accentuates a diamond's fire rather than its luster—is currently gaining popularity. The princess cut is also popular amongst diamond cutters: of all the cuts, it wastes the least of the original crystal. The past decades have seen the development of new diamond cuts, often based on a modification of an existing cut. Some of these include extra facets. These newly developed cuts are viewed by many as more of an attempt at brand differentiation by diamond sellers, than actual improvements to the state of the art. One of these is a diamond cut called Pristine Hearts which though round shaped has got a beautiful heart visible through table as well as the bottom side.

Quality

The quality of a diamond's cut is widely considered the most important of the four Cs in determining the beauty of a diamond; indeed, it is commonly acknowledged that a well-cut diamond can appear to be of greater carat weight, and have clarity and color appear to be of better grade than they actually are. The skill with which a diamond is cut determines its ability to reflect and refract light.

In addition to carrying the most importance to a diamond's quality as a gemstone, the cut is also the most difficult to quantitatively judge. A number of factors, including proportion, polish, symmetry, and the relative angles of various facets, are determined by the quality of the cut and can affect the performance of a diamond. A poorly cut diamond with facets cut only a few degrees out of alignment can result in a poorly performing stone. For a round brilliant cut, there is a balance between "brilliance" and "fire." When a diamond is cut for too much "fire," it looks like a cubic zirconia, which gives off much more "fire" than real diamond. A well-executed round brilliant cut should reflect light upwards and make the diamond appear white when viewed from the top. An inferior cut will produce a stone that appears dark at the center and in some extreme cases the ring settings may show through the top of the diamond as shadows.

Several different theories on the "ideal" proportions of a diamond have been and continue to be advocated by various owners of patents on machines to view how well a diamond is cut. These advocate a shift away from grading cut by the use of various angles and proportions toward measuring the performance of a cut stone. A number of specially modified viewers and machines have been developed toward this end. Hearts and Arrows viewers test for the "hearts and arrows" characteristic pattern observable in stones exhibiting high symmetry and particular cut angles. Closely related to Hearts and Arrows viewers is the ASET which tests for light leakage, light return, and proportions. The ASET (and computer simulations of the ASET) are used to test for AGS cut grade. These viewers and machines often help sellers demonstrate the light performance results of the diamond in addition to the traditional 4 Cs. Detractors see these machines as marketing tools rather than as scientific tools.

The GIA has developed a set of criteria for grading the cut of round brilliant stones that is now the standard in the diamond industry and is called Facetware.

 Process

 An uncut diamond does not show its prized optical properties

The process of shaping a rough diamond into a polished gemstone is both an art and a science. The choice of cut is often decided by the original shape of the rough stone, location of the inclusions and flaws to be eliminated, the preservation of the weight, popularity of certain shapes amongst consumers and many other considerations. The round brilliant cut is preferred when the crystal is an octahedron, as often two stones may be cut from one such crystal. Oddly shaped crystals such as macles are more likely to be cut in a fancy cut—that is, a cut other than the round brilliant—which the particular crystal shape lends itself to.

Even with modern techniques, the cutting and polishing of a diamond crystal always results in a dramatic loss of weight; rarely is it less than 50%. Sometimes the cutters compromise and accept lesser proportions and symmetry in order to avoid inclusions or to preserve the carat rating. Since the per carat price of diamond shifts around key milestones (such as 1.00 carat), many one-carat diamonds are the result of compromising "Cut" for "Carat." Some jewelry experts advise consumers to buy a 0.99 carat diamond for its better price or buy a 1.10 carat diamond for its better cut, avoiding a 1.00 carat diamond which is more likely to be a poorly cut stone.

Light performance

The term light performance is used to describe how well a polished diamond will return light to the viewer. There are three light properties which are described in relation to light performance; brilliance, fire, and scintillation. Brilliance refers to the white light reflections from the external and internal facet surfaces. Fire refers to the spectral colors which are produced as a result of the diamond dispersing the white light. Scintillation refers to the small flashes of light that are seen when the diamond, light source or the viewer is moved. A diamond that is cut and polished to produce a high level of these qualities is said to be high in light performance.

The setting diamonds are placed in also affect the performance of light through a diamond. The 3 most commonly used settings are: Prong, Bezel, and Channel. Prong settings are the most popular setting for diamond jewelry. The prong setting consists of four or six 'claws' that cradle the diamond, allowing the maximum amount of light to enter from all angles, allowing the diamonds to appear larger and more brilliant. In bezel settings the diamond or gemstone is completely surrounded by a rim of metal, which can be molded into any shape to accommodate the stone. Used to set earrings, necklaces, bracelets, and rings, bezel settings can have open or closed backs, and generally can be molded to allow a lot of light to pass through. Channel settings set the stones right next to each other with no metal separating them. This setting is mostly used in wedding and anniversary bands. The outer ridge is then worked over the edges of the stones to create a smooth exterior surface. This also protects the girdle area of the stone.

Fluorescence

About a third of all diamonds will glow under ultraviolet light, usually a blue color which may be noticeable under a black light or strong sunlight. According to the GIA, who reviewed a random sample of 26,010 natural diamonds, 65% of the diamonds in the sample had no fluorescence. Of the 35% that did have fluorescence, 97% had blue fluorescence of which 38% had faint blue fluorescence and 62% had fluorescence that ranged from medium to very strong blue. Other colors diamonds can fluoresce are green, yellow, and red but are very rare and are sometimes a combination of the colors such as blue-green or orange. Some diamonds with "very strong" fluorescence can have a "milky" or "oily" look to them, but they are also very rare and are termed "overblues." Their study concluded that with the exception of "overblues" and yellow fluorescent diamonds, fluorescence had little effect on transparency and that the strong and very strong blue fluorescent diamonds on average had better color appearance than non-fluorescent stones. Since blue is a complementary color to yellow and can appear to cancel it out, strong blue fluorescence had especially better color appearance with lower color graded diamonds that have a slight yellowish tint such as "I" color or "J" color but had little effect on the more colorless "D" through "F" color grades.

Cleaning

Cleanliness heavily affects a diamond's beauty. A clean diamond is more brilliant and fiery than the same diamond when it is "dirty". Dirt or grease on the top of a diamond reduces its luster. Water, dirt, or grease on the bottom of a diamond interferes with the diamond's brilliance and fire. Even a thin film absorbs some light that could have been reflected to the person looking at the diamond. Colored dye or smudges can affect the perceived color of a diamond. Historically, some jewelers' stones were misgraded because of smudges on the girdle, or dye on the culet. Current practice is to clean a diamond thoroughly before grading its color.

Maintaining a clean diamond can sometimes be difficult as jewelry settings can obstruct cleaning efforts and oils, grease, and other hydrophobic materials adhere well to a diamond's surface. Many jewelers use steam cleaners. Some jewelers provide their customers with ammonia-based cleaning kits; ultrasonic cleaners are also popular.