Generally, the less color a diamond has, the more valuable it is. Natural diamonds have a wide range of colors ranging from completely colorless to slightly yellow, or brown. Other colored diamonds come in concentrated colors like pink, yellow, and blue, but are graded on a different scaling system.
The color grading system for natural diamonds uses the letters of the alphabet from D through Z. "D" represents the least color, and is therefore the rarest and most valuable grade. "Z" grades have the most color within a normal range and are the least expensive. It is hard for the unaided eye to see variations in color grades D through J unless the stones are observed side by side.
Diamonds should be color-graded under exacting conditions by an expert grader. Using specially filtered cool, white light, these graders compare sets of diamonds with known colors, graded by the Gemological Institute of America (G.I.A.) against their master set. To obtain the most accurate color grade, graders usually place diamonds on their sides or upside-down against a neutral background, to help decrease the play of spectral colors that diamonds reflect.
Here is a diagram showing how a diamond's color is graded: