There are two ideas about where Diamond Creek got its name. Victoria's Register of Geographic Names says that it was because of the way the stones glistened in the creek water. Local legend says it's because of a bull who was trying to cross a creek. The bull had a diamond shaped white patch on its head and found difficulty crossing the creek. Thus the Bullocky decided to name the town after the bull with the diamond shape on its head and the creek it drowned in.