On October 25, 1961, NASA announced the formation of the Mississippi Test Facility, now the John C. Stennis Space Center.

[8] The land on which Diamondhead is located is the highest point of elevation (100 feet (30 m) above sea level) on the Gulf Coast in Mississippi.

Therefore, the project was named "Diamondhead" after Diamond Head, an iconic volcanic cone on the Hawaiian island of Oahu.

The company became interested in purchasing 6,000 acres (2,400 ha) of property adjacent to Interstate 10, which was still under construction in the Mississippi Coast area in the 1960s.

[10] The corporation was scheduled to close on the purchase on August 18, 1969, one day after Hurricane Camille made landfall in Hancock County.

[5] Soon after, Diamondhead had streets, lots, infrastructure, model homes, a country club, an airport, a driving range, and a pavilion that would become the community center.

The community also benefitted from other growth along the coast as employees from the Naval Oceanographic Office at Stennis Space Center, the Michoud Assembly Facility in New Orleans East, and other developments around the area chose to live in Diamondhead.

[14] A survey taken in the late 1970s revealed that a large percentage of property owners came from New Orleans to escape overcrowding conditions.

Many began to question the POA's decisions, especially over increasing monthly dues and spending large amounts of money on golf course maintenance.

In 1994, those who did not want the POA to lead the community began to advocate incorporation and conducted a petition drive for Diamondhead to become a city.

Before and during landfall, water poured into the Bay of St. Louis, and the initial flooding occurred in low-lying areas along the Jourdan River and its tributary bayous.

A city would be eligible for federal or state financial resources that the POA would not have access to as a private entity.

Opponents contended that the petition lacked a sufficient number of signatures and that incorporation requirements were not complied with.

[22] In January 2012, a motion for extension to appeal the decision was denied by the Supreme Court, and a final edict mandating the incorporation was issued.