There are special techniques that are used to cut and shape a diamond before it gets to the jewelry store. Diamond cutters use these four basic techniques:
Cleaving - To cut a rough diamond down to a manageable size, the cutter must cleave it along the diamond's tetrahedral plane, where it is the weakest. A wax or cement mold holds the diamond in place while the cutter carves a sharp groove along the plane. The cutter places a steel blade in the groove and forcefully strikes it, cutting the rough diamond in two.
Sawing - Sometimes, diamonds have to be cut where there is no plane of weakness, which cannot be done with cleaving. Instead, the cutter saws the diamond using a phosphor-bronze blade rotating at about 15,000 rpm. Lasers can also be used to saw diamonds, but the process takes hours. During the sawing step, the cutter decides which parts of the diamond will become the table (the flat top of the stone with the greatest surface area) and the girdle (the outside rim of the diamond at the point of largest diameter). Then, he proceeds to cutting.
Courtesy of the fine folks at HowStuffWorks