While crushing Gravel using the Rock Crusher, there is a chance of <1% to obtain a diamond.
A Diamond can be created out of 64 Coal and a few other resources. See Industrial Diamond.
Diamonds can be created through alchemy with the Minium Stone and 4 Gold Ingots. Recursively, you can use 32 Iron Ingots, 128 Obsidian, or 256 Wood. A few other methods also yield iron (256 Sand/Cobblestone/Dirt, 1 Ender pearl for 4 iron).
