The 37-year-old arrives at the Newcastle United Academy from Scottish Premiership side St Mirren, where he was assistant to Buddies manager Stephen Robinson.
Diarmuid is also a senior coach for Northern Ireland and will continue with the role under former Magpies player Michael O’Neill.
Born in Killarney, Diarmuid played professionally in Scotland, England, Iceland and Northern Ireland and was capped at under-21 level by the Republic of Ireland.
After beginning his coaching career in women's football with Crusaders and Glentoran, he took on youth coaching positions in the United States and with Motherwell Under-18s before becoming an assistant to Stephen Robinson at Morecambe and St Mirren.
Diarmuid said: "I'm really excited to come in. It's a role I'm really looking forward to getting stuck into.
"The club speaks for itself in terms of the size, stature and fanbase. It's a really exciting time now as well with the ownership and everything that is planned going forward.
"The opportunity to come in is something I would've never expected, but when it come across my desk, it was a really exciting one and a quick process."
Diarmuid will initially be assisted by Head of Coach Development, Jack Ross, who has been in interim charge of the Under-21s side alongside Neil Winskill.
Neil will move into a new position as the Academy's Head of Technical Development.
Newcastle United's Academy director, Steve Harper, said: "I'm delighted Diarmuid has accepted the opportunity to become Lead Coach of Newcastle United Under-21s.
"He is a young, progressive and ambitious coach, and will play a key role in supporting our talent pathway into the first team.
"I'd also like to thank Jack Ross, Neil Winskill and everyone connected with the Under-21s for their hard work and collaborative approach while we recruited into this position.
"We have gone through a rigorous process, and in Diarmuid, we have an exceptional coach and person joining us. I'd like to welcome him to the Newcastle United family."
Paul Mitchell, Newcastle United's sporting director, said: "Diarmuid is a very highly regarded coach and is a great fit for the profile we have been looking to recruit.
"He has amassed a wealth of experience during the formative years of his coaching career, working across youth, men's and women's club football and at international level.
"The Academy is a cornerstone of our sporting strategy, and Diarmuid's role is a crucial one in preparing players for the next significant step in their development journeys.
"The Academy has produced exceptional players over recent years, and we look forward to supporting Steve Harper, Diarmuid and our Academy team in continuing to build on that excellent record."
