Reed Edward Diamond was born in Brooklyn, the son of Allison, an astrologer, and Bob Diamond, a stage manager and director of shows such as The Joe Franklin Show. He was raised in Manhattan and attended the Trinity School.
Diamond attended the University of North Carolina at Chapel Hill for two years, then studied acting at the Juilliard School, where he was a member of the drama division's Group 20 (1987–1991). As a child, Diamond had small parts in the 1974 ABC Afterschool Special Sara's Summer of the Swans and in the 1976 film Two Minute Warning. His early roles as an adult included guest starring on Law & Order and Class of '96, and films such as Memphis Belle (1990) and Clear and Present Danger (1994).
His first big break came in 1995 when he joined the cast of Homicide: Life on the Street as Det. Mike Kellerman. Diamond was a regular castmember for the series' fourth, fifth and sixth seasons before Kellerman was written out at the end of season six (although Diamond would reprise the role for a two-episode story in the show's subsequent seventh, and final, season). In 2000, a feature length TV movie was produced to wrap up the series, which saw the return of all the major Homicide cast, including Diamond. He made a brief reappearance as a police detective in the key scene of the 2002 pilot of the controversial series The Shield. Recent roles include a re-make of High Noon (2000); Three Days; S.W.A.T. (2003, directed by Diamond's Homicide co-star Clark Johnson); Spider-Man 2 (2004); and Good Night, and Good Luck (2005).
As well as playing the recurring role of Stuart Collins on Judging Amy from 1999 to 2003, Diamond has guest starred on Crossing Jordan, The West Wing, Medium, Numb3rs, CSI: Crime Scene Investigation, Stargate SG-1, Without a Trace, The Mentalist, and 24. He was also promoted as one of the main cast members of The Shield, appearing as Detective Terry Crowley, so as to surprise viewers when he was murdered at the end of the first episode in 2002. He portrayed Inspector Jack Vasser in the Fall 2007 NBC series Journeyman until the cancellation of the show in December 2007. As of spring 2010, Diamond has joined the cast of the upcoming TNT series Franklin & Bash. In 2010, he voiced Barnes in Firebreather. In 2011, he had a bit part in Moneyball, as a general manager of the Cleveland Indians.