Thermal accumulation under high output power density is one of the key bottlenecks faced by GaN-based power devices. The nanocrystalline diamond (NCD) passivation layer strategy plays a crucial role in improving heat dissipation in high-power GaN devices, while the existing studies focus on GaN-based HEMT. In this study, nanocrystalline diamond films with a thickness of 380–450 nm are grown on Si-based AlGaN/GaN heterostructure materials using a microwave plasma chemical vapor deposition (MPCVD) system. Consequently, lateral Schottky barrier diode devices with NCD passivation are fabricated, and their electrical and thermal properties are investigated. The results show that the DC forward characteristics of the NCD passivated diodes are essentially the same as those of devices without NCD passivation. Moreover, dynamic voltage tests indicate that the NCD passivation layer significantly mitigates current collapse in GaN devices at high frequencies. Under a –20 V DC bias and a pulse voltage of 2.5 V, the current density degradation of NCD passivated devices is only 2.6%, whereas devices without diamond passivation almost completely degrade. Thermal imaging microscopy under varying DC power levels shows that thermal failure occurs at an output power density of approximately 4 W/mm for conventional devices, while NCD passivated devices can reach around 7.5 W/mm. The electrical degradation behaviour of NCD passivated device is also tested under long-time reverse bias. This work demonstrates for the first time the application of nanocrystalline diamond passivation to thermal management of GaN-based power diodes, and clearly demonstrates the potential of this strategy in non-HEMT power device applications.