Diaz returned to the Octagon at UFC 47, set to take on highly touted future EliteXC Middleweight Champion Robbie Lawler. Lawler was a heavy favorite coming into the fight but it was Diaz who took the offensive, chasing Lawler around the cage for the majority of the bout. In the second round, Diaz taunted Lawler, who swung wildly and missed, allowing Diaz to connect with a right hook that knocked Lawler out. Diaz was then matched up with judoka Karo Parisyan at UFC 49, but ended up losing a hard-fought split decision. He rebounded with wins over submission specialist Drew Fickett at UFC 51 and Koji Oishi at UFC 53 before losing for the second time in the UFC at the hands of The Ultimate Fighter Middleweight winner Diego Sanchez at The Ultimate Fighter 2 Finale.