Diane Sugden (née Lambert, previously Blackstock) is a no-nonsense, firm but fair, respected member of the community. As Woolpack landlady she looks after her staff and often acts as a sounding board to the punters. Diane has been unlucky in love and has had difficult marriages. However she's honest, loyal and eternally patient. Her nature is to get on with life and pick herself up when things are down.
Diane was married to Rodney Blackstock and they had Bernice. However, Rodney left them. During their marriage, Rodney had an affair with her sister Val, which resulted in Val giving birth to Paul (everyone but Val was unaware of this for over 20 years). He later married Maureen, a marriage resulting in Nicola. After Rodney left, Diane ran a B&B with a friend for 15 years, and eventually joined her daughter Bernice in Emmerdale after Bernice took over the pub. Diane herself became licensee several years later, and has since co-owned with a variety of people, including Val.
Diane offers comfort to Jack Sugden who had been through difficult times, following his discovery that his wife, Sarah Sugden, has cheated on him. They kiss but decide to be friends. They remain close for a number of years. Rodney reappears in Diane and Bernice's lives after abandoning them. Bernice forgives Rodney but Diane is more hesitant. There is still a spark between Diane and Rodney and the two spend a night together but Diane calls things off. After failed relationships with builder Jerry 'Mack' Mackinley, and Alan Turner in 2003, Diane and Jack reunite and started considering life together. When Diane decides to join Bernice in Brighton, Jack proposes in an attempt to get her to stay.
Diane is horrified to discover she had colon cancer. She goes to Scarborough with Rodney, trying to come to terms with the news. Rodney does not know about her illness and Val assumes they were having an affair. Upon finding out Diane is ill, Rodney ends things with Val, begging Diane to give their relationship another chance. However, she rejects him and soon begins planning her wedding to Jack. They marry on 21 September 2004, when Jack's daughter Victoria tells the congregation about Diane's illness. After the ceremony, Val tells Rodney that he has fathered her son Paul. Horrified by Val's selfishness, Diane disowns her and is given the all-clear early in the new year.
Diane struggles to cope with Jack's children, at the detriment to her health. In 2006, she becomes a victim of the Kings' River Show Home explosion, but makes a full recovery (albeit with a "Live for the Moment" outlook on life). Diane falls for Billy Hopwood and they begin an emotional affair. She and Jack try to work through their problems but end up separating. However they grew closer following Andy's conviction for manslaughter and whilst Jack was in Spain, Diane received a text mentioning patching things up on his return. While Jack is away, Diane takes over looking after the family and rebuilds bridges. She is appalled when Andy is discovered to be beating his wife, Jo but helps him when he suffers a breakdown. Diane is devastated when Jack dies in February 2009. She is comforted by a letter he had written before his death, letting her know how much he loved her.
Diane tries to move on with her life, but struggles. Val, after receiving an offer for the pub from Maisie Wylde, tries to convince Diane she is too depressed to stay on as owner and should sell up. When Diane learns of Val's scheme, she shocks her by pretending she plans to sell to Rodney and Nicola. She then chased Val out of the pub with a water squirter. Sandy Thomas, who constantly argues with his son Ashley, asks if he could move into the Woolpack. Diane agreed. Douglas Potts helps Sandy move in, and after a few drinks, Diane impulsively kisses him. She realises she needs to sort herself out, and leaves to visit Bernice, Louise Appleton and Paul, respectively. On her return she discovers Daz has left, and Andy has given custody of his daughter Sarah to Debbie Dingle and is on the verge of a breakdown. Following another fall out with her Val, Diane realises that they can no longer work together and she uses the inheritance left to her by Jack to buy Val out, making her the sole owner of The Woolpack Inn.
Charlie Haynes, an old friend of Rodney's, wins Diane's heart. Their relationship gets off to a good start, and Charlie whisks Diane away on romantic holidays, and away to France, even taking Victoria along so she can brush up on her French. On this trip Diane opens up to Charlie and tells him about about her cancer. However, their happiness comes to a halt as Charlie reveals to Diane he was suffering from an inoperable brain tumour, meaning he will die and does not have long left. Making the most of their time left, Charlie and Diane decide to move to France, with Diane deciding to sell the Woolpack. On the night of her leaving party, Charlie leaves to inform his daughter of his illness. The next day, a worried Rodney phones the hospital, on;y to find there are no records of Charlie or his doctor ever being at the hospital, and Rodney and Doug find Charlie's shop had never been used. Diane and Val go to France, only to find the Charlie's chateau is in fact, someone else's and the owner has never heard of Charlie. Diane then realises she has been conned and is left devastated.
Doug offers Diane his life savings, which she tearfully accepts, much to the annoyance of Doug's daughter, Laurel, who then goes on to warn Diane it is only a loan, and she must pay Doug back as soon as she can. Diane hopes that she may now have a future for Doug, but he reconciles with estranged wife, Hilary, and leaves in early 2011 to travel the world with her, leaving Diane once again heartbroken. The following year, Diane tries to sell the pub, wanting a fresh start and finding it an increasing struggle running the place on her own, but unable to find a buyer for the whole business, she settles for Chas Dingle buying a stake in the Woolpack and becoming her new business partner. Diane and Chas' friendship and partnership becomes strained in 2012 after the revelation of Chas' affair with Cameron Murray. Diane is touched when Andy and Debbie name their newborn son after Jack. Bernice returns before Christmas after her marriage falls apart and Diane departs shortly after Bernice returns and travels to Brighton to look after her daughter, Dee-Dee. Diane returns in early June, to say she wants to go live with Dee-Dee in Brisbane, and wants to sell her share on the Woolpack. She changes her mind, to Bernice's disappointment. She also has a brief fling with Val's husband Eric, earning her sister's ire.
Things look up for Diane when Douglas returns to the village in 2014 after his marriage has permanently collapsed. They soon give a relationship another go, around the same time as Andy announces that he and his ex-wife Katie plan to remarry. Diane is sceptical but delighted; she is also happy to see her stepson Robert return, although wary, due to his past feud with Andy. Diane feels caught in the middle when they resume their conflict, but the family soon has bigger things to worry about as Katie is killed after falling through rotting floorboards, nearly driving a grief-stricken Andy to suicide. Diane suffers an even more personal loss when she and Val are locked in a hall of mirrors by Doug, Rodney and Eric, determined to make them patch up their latest squabble. The men go to the Malt Shovel for a drink, only learning too late that a helicopter has crashed into the village, making the hall a death trap. Val and Diane make peace, and Val, seeing a large shard of glass above her head ready to fall at any moment, insists Diane be removed by the paramedics first. She is killed before they can save her, leaving Diane feeling devastated and guilt-ridden.
Several months later, the family is again rocked when Andy accuses Robert of being responsible for Katie's death. Diane and Victoria are quickly convinced that his grief has clouded his judgment. Robert is shot soon afterwards. Diane and Victoria stay by his side, clashing with the Dingles after Aaron Livesy, his ex-lover, is arrested for the crime. Tensions remain high between Chas and Diane until Robert wakes from his coma and clears Aaron's name. Chas and Diane make a tentative amends, but Chas, suffering a mental breakdown, stabs Diane in the stomach and flees. Diane is stunned to learn who is responsible, but even moreso when she learns her cancer has returned. She decides that Chas helped save her life, and the women again make amends. As Diane undergoes another grueling round of chemotherapy and treatment, she decides she wants to enjoy the rest of her life, and again puts her half of the pub for sale.