In today's diverse world, differentiated instruction holds the potential to accommodate learners' diversities in EFL classrooms. Prior to differentiating the instruction, conducting diagnostic assessment is crucial to portray learners' characteristics and needs. Hence, this chapter explicates EFL teachers' understanding and practices of diagnostic assessment within the context of EFL differentiated instruction. A survey, involving 155 EFL teachers from Indonesian secondary schools, was employed. The quantitative data were then supported by the data from semi-structured interviews. The findings revealed most teachers had a good understanding of diagnostic assessment, though a significant proportion of them did not frequently make use of the diagnostic assessment results to differentiate instructions, and half of them successfully practiced it. This chapter also figured out EFL teachers' techniques and strategies to differentiate content, process, and product evaluation, with different levels of complexity based on students' readiness, interest, and learning profiles.