We had no clue where this was but figured it can't be too hard to find. If you ask around, someone is bound to know. Apparently, there are supposed to be lights inside so you can see but they were not on when we went. We went back over to a a rock climbing rental place and asked if we could rent a flashlight. He said he had flashlights but not for rent. So, I asked if we could buy one. He said no. Hmmm, not for rent and not for sale...very odd! He asked why we needed one and proceeded to let us borrow it. I believe the rock climbing rental place provided tours that included the gear. Therefore, one price for the package and that's why the flashlights were not for rent or sale. Anyhow, this cave isn't really all that big. It is impressive to see. Watch your step - there are rounded wood planks to walk on and it's rather easy to trip on them. Please see my travelogue for photos of Diamond Cave. The photos posted here should help you find it.
Diamond cave is located near East Rai Leh beach. The cave itself houses some amazing limestone waterfalls and the highlight being the golden quartz waterfall, which sparkles in the lights. A path leads you around the cave which isn't very big. The thing that struck me when we first got in there is the squeeking bats hanging on the ceiling of the cave! Legend has is that Diamond Cave is the grand palace of the sea princess, said to be an Indian princess who died at sea near Rai Leh. Princess Cave is her summer palace.
The cave isn't well signposted and took us a good half hour wondering around and asking locals for directions until we found it. Head north up the beach into the little village find signs to the Diamond Bungalows and resort and head in that direction, rather than going into the resort head left through a gate and follow the path round to the cave. The path looks like it hasn't been used for years but persevere and you'll get there.
The path through Diamond Cave takes you to several incredible limestone formations as well as some enormous stalagmites and stalactites. The highlight is probably a huge golden sparkling "stone waterfall" of quartz. The cave isn't very large; a thorough visit takes only 15-20 minutes.
Bottom-line: Something to do if you have some downtime while at East Railay.