Ni-P coated diamond powder was fabricated successfully by using electroless plating. Effects of active solutions, plating time, reaction temperature, and the components of the plating bath on the Ni-P coating were investigated systematically. Moreover, a study on the thermal stability of Ni-P coated diamond under various atmospheres was performed. The results indicate that Pd atoms absorbed on the diamond surface as active sites can consequently enhance the deposition rate of Ni effectively. The optimized plating bath and reaction conditions improve both the plating speed and the coverage rate of Ni-P electroless plating on the diamond surface. Compared to the diamond substrate, the diamond coated with Ni-P films exhibits very high thermal stability and can be processed up to 900℃ in air and 1300℃ in protective atmosphere such as H₂.