The mechanism of the diamond bit cracking rocks is: The rock will be in extremely high stress conditions to cause plastic deformation when rock is cut by diamond; in the meanwhile cuttings appear because of the rotary torque. During the drilling process, because the work environment of diamond bit lips is much complicated and the diamond grit is quite small, so it’s difficult to detect the varieties of the stress field of the single diamond grit. According to the simplified boundary conditions, we can simulate the stress field of the diamond grit and the stress conditions of the matrix with the FEM to reveal the process of the diamond grit cutting rocks. This paper simplifies the process model of the single diamond cut rocks by analyzing the diamond grit’s motion law in theories method (assumption diamond grits be well-proportioned to distribute in the matrix and taking one single diamond grit as the research object) and establishes the three-dimensional model of the diamond grit cutting rocks, in which the diamond grits and the matrix are regarded as elastic body and the rocks are regarded as concrete body. At the end we got the simulation process of the diamond cutting rocks with the ANSYS/LS-DYNA software and analyzed the stress conditions of the diamond grits with different degrees of exposure, depth and cutting velocity. Through the simulation of cutting rocks by diamond, it reveals the rule which the diamond grit cut rocks.