Originally named MS Birka Princess, MS Sea Diamond was built by the Finnish state-owned company Valmet at their Vuosaari shipyard in Helsinki at a cost of 350 million Finnish markka (€58,9 million). She was delivered in 1986 and operated by Louis Hellenic Cruise Lines for Birka Line in the Baltic Sea cruise ferry market, sailing on 24-hour cruises between Stockholm in Sweden and the Åland Islands in Finland. Between 1990 and 2003 she also made longer cruises around the Baltic Sea during the summer season.
As an interesting 'claim to fame', from 1992 and 2002, the ship's exterior was used to portray the fictional ship MS Freja in the Swedish TV soap opera Rederiet.

The sinking of this ship didn't leave masses dead and missing, in fact only two were reported missing and the remainder survived. On April 5, 2007, at around 16:00 EEST (13:00 UTC) the ship ran aground on a well-marked volcanic reef east of Nea Kameni, within the caldera of the Greek island of Santorini, began taking on water, and listed up to 12 degrees to starboard before her watertight doors were reportedly closed (a report which was later refuted when the wreck was examined). The 1,195 passengers, mostly Americans and Canadians, were initially all reported to be safely evacuated in three and a half hours, with four injuries. Some of the passengers were evacuated from the car ramp through the former car deck onto boats, while other passengers had to climb down rope ladders from the higher decks. The ship was towed off the rocks, and her list stabilized. Later, it was reported that two French passengers were missing. Two French citizens, Jean Christophe Allain, aged 45, and his daughter Maud, 16, are listed as the missing passengers. Mrs. Allain said her cabin filled with water when the ship struck rocks and that she narrowly escaped. She was not sure whether her husband and daughter made it out because the events happened so suddenly. Her son was on deck at the time and was evacuated safely'

Investigations into the accident started a couple of days afterwards and Greek authorities announced that they were charging the captain and five other officers with negligence. State television reported they were charged with causing a shipwreck through negligence, breaching international shipping safety regulations and polluting the environment. Additional charges could be made depending on the fate of the two missing passengers. All six were released until further notice but if convicted they could face a five-year prison sentence. On June 19, 2007, the owners, operator and captain of the Sea Diamond cruise ship were fined €1.17 million for causing marine pollution