He served in the army during World War I and afterwards studied law at the University of Marburg from 1919.
He volunteered and was accepted for military service at the end of World War I.
In 1930 he entered the Prussian Ministry of the Interior and two years later was appointed a senior government adviser in the police section, charged with taking measures against both communists and Nazis, under the direction of the Social Democratic Minister, Karl Severing.
In June 1933 Diels persuaded Goering to establish a secret police force, becoming Chief of Department IA in the Prussian State Police. This was the origin of the Gestapo and, as its first head, Diels carried out a purge of Republican police officials, thereby helping to dig the grave of constitutional government in Germany.
He provided Goering with secret files that consolidated his patron’s position in the Party and were capable of ruining his political adversaries. Though he assured Himmler in 1933 that he intended to ‘put into practice the principles evolved by the SS in my professional field as far as the Prussian political police is concerned', Diels soon found himself caught in a power struggle between Goering and the SS leader. At the end of September 1933 Goering had to sacrifice his confidant and favourite assistant to the intrigues of his rivals, though later appointing him Deputy Police President of Berlin. Diels judged it safer to flee to Karlsbad, Bohemia, for five weeks until he was recalled by Goering to resume his duties as head of the Gestapo. Diels was finally dismissed on 1 April 1934 (being replaced by Himmler), but was protected from Heydrich's intrigues by his patron. In May 1934 Diels was appointed Regierungspräsident (a local government post) of Cologne and for the next six years he was also in private employment as inland shipping administrator of the Hermann Goering Works.
In 1940 he became Regierungspräsident of Hanover, but was dismissed after refusing to carry out a district leader’s orders to arrest Jews in the city. He was saved from arrest by Goering (whose cousin he had married) on a number of occasions and rescued by him from a Gestapo prison after the July 1944 plot against Hitler. After the fall of the Third Reich, Diels worked as an administrator in Lower Saxony and as an Under-Secretary in the Bonn Ministry of the Interior until 1953.
He died on 18 November 1957 while on a hunting expedition, accidentally shooting himself as he took a gun out of his car.
The conservative Diels proved to be a turncoat ‘democrat’, a bureaucratic opportunist who defected in 1933 to the Nazis and Hermann Goering, placing his profound knowledge of political police techniques at the latter’s disposal and emerging as his assistant minister.
Diels in his youth acquired a reputation as a boisterous drinker and great womanizer. Nevertheless entering the Prussian Ministry of the Interior he became an ambitious and perspicacious official.