Dietrich was born in Senden near Ulm to mill manager Otto and Maria née Kramer.
He developed otosclerosis in 1907 and had to move to Switzerland for treatment but he progressively lost hearing and became completely deaf.
He became an assistant at Stuttgart under Eberhard Fraas and joined an excavation at Steinheim-on-Murr where the dig discovered a giant deer and a mammoth (Elephas primigenius).
He retired in 1959 but continued to work and during World War II he and his wife lived in the basement of the museum.
[1] Dietrich married Lotte Trendelenburg, daughter of a privy councillor, in 1921 and their only son died at the front during World War II.