The technology of grading of micro diamond powder and the dispersion of micro powder in water are studied in this paper. At the same time a system of shooting flow grader is designed. The results show that steady and even velocity distribution is the key to improve effect of grading in shooting flow grader. The relatively even velocity distribution can be produced within the section of pipe flow which follows the perfect development of shooting floso the better precision of grading can be got. In the grader jet whirl can make the powder be dispersed repeatedly. In addition, velocity of flow and velocity and position of feeding can significantly affect the result of grading. According to the study micro diamond powder is difficult to be dispersed in water. Adding electrolytic dispersants into water can improve the dispersion, of powder. Sodium silicate and sodium phosphate are good dispersants for micro diamond powder. The optimum concentration of their solution is between lg/L and 1.5g/L.