[4] After graduation, he worked as a research assistant at the Swiss Federal Experiment Station for Viticulture and Horticulture at Wädenswil,[4] where he discovered on leaves of a cherry tree the first occurrence in more than 100 years of a rust fungus (Puccinia cerasi), a fungus which is common south of the Alps, but is rarely seen in the north.

This led to the unexpected discovery of the causative agent, a small RNA molecule, eighty times smaller than the smallest known viruses, for which he proposed the term viroid.

[8][9] Later, viroids were characterized as single stranded covalently closed circular RNA molecules occurring as highly base-paired rod-like structures.

[10] Viroids, together with viroid-like satellite RNAs have been officially endorsed by the International Committee for Virus Taxonomy (ICTV) as a novel order of subviral agents,[11] which, in its 2014 publication, encompassed 2 families, 8 genera and 32 species.

[12] In 1989, Diener hypothesized that the unique properties of viroids make them more plausible candidates as "living relics" of a hypothetical, pre-cellular RNA world than are Introns or other RNAs then considered as such.