In the experiment, electrons did not flow through diamond as they do in traditional electronics.
Rather, they stayed in place and passed along a magnetic effect called "spin" to each other down the wire - like a row of sports spectators doing "the wave."
This spin could one day be used to transmit data in computer circuits, researchers said.
The experiment carried at The Ohio State University, found that diamond transmits spin better than most metals in which researchers have previously observed the effect.
Researchers worldwide are working to develop so-called "spintronics," which could make computers simultaneously faster and more powerful.
Diamond has a lot going for it when it comes to spintronics, said lead investigator Chris Hammel.
It is hard, transparent, electrically insulating, impervious to environmental contamination, resistant to acids, and doesn't hold heat as semiconductors do.
The price tag for the diamond wire did not reach engagement ring proportions, Hammel said.
It cost a mere USD 100, since it was made of synthetic, rather than natural, diamond.
The findings represent the first very small step along a very long road that could one day lead to diamond transistors, researchers said.
Electrons attain different spin states according to the direction in which they're spinningup or down.
Hammel's team placed a tiny diamond wire in a magnetic resonance force microscope and detected that the spin states inside the wire varied according to a pattern.
The researchers had to seed the wire with nitrogen atoms in order for there to be unpaired electrons that could spin.
The wire contained just one nitrogen atom for every three million diamond atoms, but that was enough to enable the wire to carry spin.
The physicists were able to observe electron spin on a smaller scale than ever before.
They focused the magnetic field in their microscope on individual portions of the wire, and found that they could detect when spin passed through those portions.
The wire measured only four micrometres long and 200 nanometres wide.
In order to see inside it, they set the magnetic coil in the microscope to switch on and off over tiny fractions of a second, generating pulses that created 15-nanometre wide snapshots of electron behaviour.
The spin states lasted twice as long near the end of the wire than in the middle, researchers said.
The finding appears in the journal Nature Nanotechnology.