The bout served as the featured matchup of Saturday's The Ultimate Fighter 18 Finale event, which took place at Las Vegas' Mandalay Bay Events Center.
It was Maynard (11-3-1) who took the advantage in the early going, scoring a takedown and looking to attack from top position. But Diaz (17-9-0) refused to stay on the floor and continually worked back to his feet, even after Maynard answered with a slam to the canvas.
Once there, Diaz's boxing did the rest.
A stiff land hand started the assault, and as Maynard staggered against the cage Diaz unleashed a non-stop barrage of strikes. Dazed and bleeding, Maynard simply couldn't recover from the non-stop pressure.
Referee Yves Lavigne gave him every chance to recover, but Diaz continued the onslaught until he earned the TKO finish, and Maynard stumbled to the canvas as the fight was waved off at the 2:38 mark of the first round.
"I could tell he was out, but he wouldn't drop," Diaz said. "I've got to keep throwing to drop these fools. Maybe the ref should've stopped it earlier, I don't know."
In the night's co-feature, Team Tate fighter Julianna Pena overwhelmed former world boxing champion Jessica Rakoczy of Hamilton en route to claiming the women's bantamweight tournament title.
Pena rushed forward at the opening bell, walking through Rakoczy's punches to get into a clinch and bring the fight to the floor. Once there, a relentless attack saw her move quickly to mount and unleash a dizzying barrage of punches and elbows from the top. Rakoczy tried desperately to escape the position but Pena was simply too much.
Referee Mario Yamasaki watched the action closely, offering warnings along the way, and eventually waved off the fight with one second left in the first round.
With the victory, Pena became the first female winner in "The Ultimate Fighter" series history and earned a six-figure UFC contract.
"I figured she would go to her strengths and use angles and try to box me, but I didn't give her any space. I was relentless," Pena said after the win. "I never thought there would be women in the UFC, so to be the first female 'The Ultimate Fighter' winner is amazing."
In the men's tournament final, Chris Holdsworth (5-0) impressed in a second-round submission win over Davey Grant (8-2), also scoring a six-figure UFC contract in the process.
Grant looked to be the stronger fighter to open, rattling off powerful punches that just missed their target. But a wiry Holdsworth pushed forward with counters and constantly looked to take the fight to the floor. He'd get his chance in the second round.
After avoiding a few more powerful punches, Holdsworth changed levels and brought the fight to the floor before moving swiftly to the back in a crafty transition. Once there, he made use of the opportunity, immediately working for a rear-naked choke. While the first effort failed, a second attempt saw the arm slip under the neck, and the tap came at the 2:10 mark of the second frame.
"If you chase your dreams, they will come true," Holdsworth said after the fight. "Davey's a family man and a role model, but tonight was my night."
In the evening's opening matchup contestants Jessamyn Duke (3-0) and Raquel Pennington (4-3) each picked up clear-cut decision wins.
Duke out-struck fellow Team Rousey fighter Peggy Morgan (2-1) over the course of their three-round affair, utilizing a crisp left hand to batter her opponent's face for the entirety of the matchup. Despite boasting a reach advantage, Morgan struggled to find the target and was out-struck 123-34 according to a FightMetric report, and Duke earned the fight with scores of 30-27 on all three judges' cards.
"Getting this fight is a huge weight off my shoulders, and I'm honoured to fight in the UFC," Duke said after the win. "I can finally share everything about this life-changing experience of being on 'The Ultimate Fighter.'"
Meanwhile, Pennington didn't necessarily look to be clicking on all cylinders during her three-round clash with Roxanne Modaferri (15-11), but still did enough to pick up a convincing victory.
Modafferi moved well throughout the contest, looking to create angles and avoid her opponent's power. And while she attempted 218 strikes to her opponent's 86, she landed only 22 per cent of her blows as opposed to Pennington's 60 per cent.
In short, when Pennington pulled the trigger, she was successful. Although she'll need to be more active in future appearances, Pennington's effort was enough to score a win, 30-27, 30-27 and 29-28.
"I'm happy with the win, but knowing my capabilities I didn't fight my best fight," Pennington said after the win. "I wasn't happy because I have very fast hands, and I didn't really display those. Maybe it was because of my nerves."