Hydrogen plasma etching of graphite generates radicals that can be used for diamond synthesis by chemical vapor deposition (CVD). We studied the etching of polycrystalline graphite by a hydrogen microwave plasma, growth of diamond particles of the non-seeded graphite substrates, and characterized the diamond morphology, grain size distribution, growth rate, and phase purity. The graphite substrates served simultaneously as a carbon source, this being the specific feature of the process. A disorder of the graphite surface structure reduces as the result of the etching as revealed with Raman spectroscopy. The diamond growth rate of 3-5 µm/h was achieved, the quality of the produced diamond grains improving with growth time due to inherently nonstationary graphite etching process.