Most diamonds of gem quality used in jewelry vary in shade from completely colorless down to a visible yellow or brown tint.

The rarest and most expensive are diamonds in the colorless range graded D,E and F on a scale that descends to Z. Diamonds with more color than Z, or in other shades such as orange, pink, blue, etc. are classified as "Fancy Colored Diamonds" and are graded on the IGI Colored Diamond Report.

To determine the correct color, all submitted diamonds are compared to an internationally accepted master set of stones, the colors of which range from D, or colorless (the most sought after) to Z, the most yellow/brown - aside from "fancy" yellow or brown.

IGI assigns a color grade for diamonds in the D-Z range with the diamond face-down and viewed through the pavilion. This is because size, shape, cut quality and the presence of fluorescence can influence visible face-up color. In fact, lighting, mounting choice and even the clothes one wears have an impact on color, so IGI uses the most neutral environment possible to ensure accurate and consistent results.

Since diamonds form under extreme heat and pressure, internal and external characteristics are common. These characteristics help gemologists separate natural diamonds from synthetics and simulants, and identify individual stones.

There are two types of clarity characteristics: inclusions and blemishes. In order to grade the clarity of a diamond, it is necessary to observe the number and nature of external and internal characteristics of the stone, as well as their size and position. The difference is based on their locations: inclusions are enclosed within a diamond, while blemishes are external characteristics. IGI grading reports show plotted diagrams of clarity characteristics marked in red for internal and green for external features.

While nature determined the color and clarity of a natural diamond, man is responsible for the cut quality which brings it to life. The planning, proportions, cutting precision and details of finish determine how brilliant, dispersive and scintillating the diamond will be. If the cutting factors under man's control are not optimized, the appearance of the diamond can be adversely affected.

Diamond faceting has changed over time, particularly as lighting has evolved. There are many shapes and cutting styles, each with different visual properties. The most popular diamond in the age of modern electric lighting is the Round Brilliant.

When a ray of light touches the surface, part of it is reflected back. This is called external refraction. The rest of the ray penetrates the stone and moves through it. This is known as refraction. The part of the ray reflected back to the surface exits, broken into spectral colors in a prism-like effect. This is known as dispersion. All of these elements contribute to the appearance of a diamond.

Elements of diamond beauty can be described as brilliance (all light returning to the eye), dispersion or 'fire' (seen as white light is broken into spectral colors), contrast patterns (contrasting light and dark areas created by the viewer's reflection) and scintillation or 'sparkle' (seen as the diamond, the light source or the observer move). These qualities combine to create the life of the diamond and the way it reacts to lighting and environment.