Diaz grew up in public housing in Harlem, New York where he became an ASPIRAnte at his high school. He graduated from St. John's University in New York City with a B.S.in accounting in 1969, having worked his way through school. He earned a J.D.from Temple University in 1972 – the first Puerto Rican to receive that degree at that University.

Diaz served as a special assistant to Vice President Walter Mondale on a White House Fellowship in 1977. He was elected as a Judge of the Court of Common Pleas, First Judicial District of Pennsylvania, from 1981 to 1993, and was also a lecturer at the Temple University School of Law from 1983 to 1992. Bill Clinton appointed him HUD General Counsel in 1993, and he served in that position, under Secretary Henry Cisneros, throughout Clinton's first term. Diaz worked for Mayor John Street as the Philadelphia City Solicitor from December 2001 through January 2004.

As a young lawyer, Diaz worked at Fell, Spaulding, Goff and Rubin (1976-1977) and Wolf, Block, Schorr and Solis-Cohen (1978-1981). After leaving the Clinton Administration, Diaz was partner of the law firm Blank Rome LLP from February 1997 until he joined the Street  Administration in 2001. Later, he rejoined Black Rome and served there from March 2004 through May 2007.He has served as Of Counsel to Cozen O'Connor, a Philadelphia based law firm, since May 2007.

A director of Exelon since January 27, 2004, Diaz serves on the risk oversight, energy delivery oversight and generation oversight committees. He also serves as a director of PECO Energy Company, an Exelon subsidiary

Diaz founded the first organization devoted to black and Hispanic law students at Temple University while he was a student there, and he has been a member of Temple's Board of Trustees since 1992. Having been the first Puerto Rican to be admitted to the Pennsylvania Bar Association in 1973, he later succeeded Cesar R. Miranda as executive director for the Spanish Merchants Association of Philadelphia, a self-help group for Hispanics who own or aspire to own businesses. His board and committee memberships include the Free Library of Philadelphia (1982-1993), the Philadelphia Independent Charter Commission(1992-1993), and the World Affairs Council of Philadelphia (1997-2002), and the Pan American Association (2001- ).