Diaz was optioned to the Padres' minor-league camp Wednesday.
This move comes as a bit of a surprise after Diaz received praise from outfielder Wil Myers and manager Andy Green for his performance thus far in camp. The 23-year-old appeared in 31 games for the major-league team in 2017, posting a 7.34 ERA and 1.66 WHIP with a 33:25 K:BB over 41.2 innings. He will likely begin this season at the Triple-A level, but he remains a candidate to join the team at some point in 2018.