Electrical discharge grinding (EDG) is becoming more prevalent in the manufacturing of polycrystalline diamond (PCD) tools. This paper concerns investigation of the effects of machining parameters, as well as finishing in-feed, to the surface quality obtained when using EDG to erode PCD. With the aid of the morphological findings, different PCD erosion mechanisms are discussed. Experimental results demonstrated that the eroded surface quality of PCD was significantly affected by the selected parameters. High temperature due to the erosion process resulted in the partial conversion of diamond to graphite phase under the surface. Higher finishing in-feed produced better surface quality and caused lower surface graphitization and lower tensile residual stress. A model for the thermal stress prediction was developed and found to have good agreement with the experimental findings.