Diamond possesses excellent thermal conductivity and tunable bandgap. Currently, the high‐pressure, high‐temperature, and chemical vapor deposition methods are the most promising strategies for the commercial‐scale production of synthetic diamond. Although diamond has been extensively employed in jewelry and cutting/grinding tasks, the realization of its high‐end applications through microstructure engineering has long been sought. Herein, we discuss the microstructures encountered in diamond and further concentrate on cutting‐edge investigations utilizing electron microscopy techniques to illuminate the transition mechanism between graphite and diamond during the synthesis and device constructions. The impacts of distinct microstructures on the electrical applications of diamond, especially the photoelectrical, electrical, and thermal properties, are elaborated. The recently reported elastic and plastic deformations revealed through in situ microscopy techniques are also summarized. Finally, the limitations, perspectives, and corresponding solutions are proposed.