[clarification needed] When Abu Musab al-Zarqawi was head of al-Qaeda in Iraq, he designated Diyala as the capital of the Islamic caliphate he planned to establish in the country.

In April 2006, on Saddam Hussein's birthday, insurgents[clarification needed] launched a coordinated offensive throughout the province, attacking Muqdadiyah, Balad Ruz, Kanaan, Khalis, Khan Bani Sa'ad and the capital Baqubah.

The insurgents used the rural areas east and southeast of the capital, from Balad Ruz to Turki as supply bases for their bombing campaigns in Baghdad and Diyala.

They were also based in the Diyala river valley, northeast of Baqubah, where they fought for control of Muqdadiyah, an important line of communication to Lake Hamrin, Kirkuk and Iran.

The insurgents also had control of the tribal areas of Khan Bani Sa'ad south of Baqubah to Salman Pak, south-east of Baghdad.

[8] Despite that, however, the insurgents had some successes early in the campaign, mainly when they shot down a Black Hawk helicopter on January 20, killing twelve U.S. soldiers.

In January 2007, it was reported[9] that Sunni insurgents were able to kidnap the mayor of Baquba and blow up his office, despite promises from American and Iraqi military officials that the situation in the city was "reassuring and under control".

[11] On March 13, 700 men from the Army's 5th Battalion, 20th Infantry Regiment, which includes Stryker armored vehicles, were sent from Baghdad to Diyala as reinforcements to the 3,500 U.S. and 20,000 Iraqi soldiers already in the province.

[12] The next day, as the first batch of the reinforcements was moving close to the outskirts of Baquba, the Stryker convoy was hit by machine-gun, RPG and mortar fire.

By the close of the operation on March 24 only the town of Zaganiya was left as the last insurgent stronghold in the Baqubah river valley.

This coincided with a double suicide bombing in Baghdad on the Shaab area marketplace that killed 82 people, including many women and children, and wounded 138 others.

Also, even before Baghdad Security Plan, the Shi'a dominated military and police units in Diyala were conducting mass killings of Sunnis[citation needed].

[citation needed] Because of the crackdown in Baghdad, many Shiite Mahdi Army units fled from the capital to Diyala where they took up positions in the western parts of the province and carried out attacks against American and Iraqi military targets.

After a month of street battles the fighting ceased in large parts of the city but the town of Al Khalis, approx.

15 km to the north, seemed to have become a major restaging point for insurgents retreating form Baqubah, despite the nearby presence of significant US forces at FOB Grizzly and People's Mujahedin of Iran personnel at "Ashraf City".

The attacker detonated a suicide belt inside the Shifta Shiite mosque in western Baquba during the daily breaking of the Ramadan fast.

After Coalition troops entered previously insurgent-held territories of the province they started to find in November large numbers of mass graves, mostly around Baqubah, which contained anywhere from 10 to 20 bodies.

In January 2008 the Multinational Force Iraq and New Iraqi Army launched a new offensive (codenamed Operation Phantom Phoenix) in the region to eradicate the remaining insurgents in Diyala and the neighboring Salah ad Din Governorate.