In 1990, he was appointed head of department in Shabak's Counter Terrorism Division, which was responsible for the collection and analysis of intelligence and carrying out operations based on information received.

In 1993 he was entrusted, by Prime Minister Yitzhak Rabin and then-director general of the Shabak Yaakov Peri, to establish ties with the Palestinian security forces as part of the Oslo Peace Accord.

[3][better source needed] In 2009, in an unusual act, the Israeli Prime Minister Benjamin Netanyahu requested Diskin to extend his service, due to his integral and unique role in maintaining the national security of Israel.

[6] Diskin, along with former Mossad Director Meir Dagan and former IDF Chief of Staff Gabi Ashkenazi, have been highly critical of the diplomatic positions of Prime Minister Netanyahu's coalition; since his retirement from the Shabak, he has spoken on a number of occasions on his view of the need for diplomatic progress vis-à-vis the Palestinian Authority and the wider Arab world.

[8] In 2012, Diskin, along with the other living former directors of the Shabak, was featured in a documentary film, The Gatekeepers in which he discussed some of the main events of his tenure in the Shin Bet and identified as a fluent speaker of Palestinian Arabic.