The combination of space-time (ST) coding and continuous-phase modulation (CPM) is attractive for powerefficient transmission over fading channels. In this paper, we propose a diagonal block-based ST-CPM (DBST-CPM) scheme, which in addition to its high power efficiency facilitates noncoherent detection at the receiver. DBST-CPM can be regarded as a non-trivial extension of well-known differential ST modulation (DSTM) with diagonal signal matrices for linear modulation formats. For optimization of the code parameters of DBST-CPM we derive an upper bound on the frame-error rate of DBST-CPM in the quasi-static fading channel (QSFC) and we present an efficient optimization algorithm. Additionally, we derive decision rules for low-complexity non-coherent detection of DBST-CPM in various fading environments. Numerical and simulation results show that (a) the derived upper bound accurately predicts the performance of DBST-CPM in the QSFC, (b) the proposed code optimization yields highly power-efficient designs, and (c) the non-coherent detectors approach the performances of their coherent counterparts for various fading channel models.