In this research, nanodiamond was synthesized by laser irradiation on graphite particles suspended in water. The synthesis process of diamond, purification process of diamond, the mechanism of the diamond formation and the influence of the particle size and phase structure of the carbon particles were investigated. The graphite particles were dispersed in water by ultrasonic machine and the suspension was cycled by a water pump. An Nd: YAG pulsed laser was used to irradiate the graphite particles suspended in water, and then the acquisition was purified to get nanodiamond. The results of weight lost experiment of raw materials indicated that nanodiamond couldn’t be separated by oxidation in air, and the study of chemical oxidation indicated that nanodiamond could be purified well by boiling in high purity perchloric acid. Transmission Electron Microscopy (TEM) results indicated diamond was formed through a molten-nucleation-growth process but not solid transformation. The graphite particles were molten by the laser and formed aggregate structure, and then nanodiamond was nucleated at the surface of aggregate and grew up. The particle size and phase structure of the carbon particles can influence the synthesis result: the size of graphite particle was important, thus microcrystalline graphite with smaller particles was better than flake graphite; the turbostratic structure of carbon black tended to transform to graphite structure in the experiment condition, so nanodiamond can not synthesized by carbon black.