Town were looking for a 17th successive home win on a Tuesday night but it was always going to a challenge against a team littered with players that were in the Premier League last term.
Blues were a match for the Tigers in the first-half and could have been in front at the break with Daryl Murphy hitting the inside of the post.
Diame’s goal on 48 minutes proved decisive though leaving Blues six points shy off the Play-Offs.
Luke Hyam and Jonathan Douglas returned to the Town starting line-up after injury and suspension, with Ben Pringle making his home debut after joining on loan from Fulham.
Freddie Sears provided the first opening of the game, a burst down the right but his cross had too much on it for Murphy.
David Meyler forced a corner for the Tigers, Christophe Berra clearing the danger, then it took a brilliant save from Bart Bialkowski to keep out Robert Snodgrass’s free-kick after Tommy Smith had fouled Abel Hernandez just outside the box.
Sears’ clever pass released Jonas Knudsen but Michael Dawson was in the right place to spot the danger, Hernandez firing well over at the other end in a cagey first 20 minutes.
Smith did well to block Diame’s shot, Andrew Robertson’s cross escaping Hernandez, then Town had a penalty claim when Brett Pitman went down in the box under a challenge from Robertson as he attacked Sears’ cross.
Berra’s header from the corner was forced behind as Town threatened an opener, Hull ‘keeper Allan McGregor at full stretch to deal with Pitman’s cross.
Town were a coat of paint from edging in front eight minutes before the break, Pringle’s free-kick met by Murphy on the turn and his left foot strike hit the inside of the post and bounced to safety.
Luke Chambers almost forced the ball past McGregor from another Pringle free-kick as Blues finished the half on the front foot but with no reward.
It was the Tigers who got the breakthrough though three minutes into the second-half, Robertson’s driving run and pass finding Diame who finished superbly.
The midfielder went close to a second a minute later, his left foot effort from the edge of the box just clearing the bar.
It then needed a brilliant challenge from Chambers to stop Meyler making it two, Jake Livermore smashing a shot against the post after Bialkowski had saved from Sam Clucas.
Chambers’ cross had McGregor scurrying to watch the ball to safety, Bialkowski doing the same at the other end from Clucas’ deflected cross.
Kevin Bru replaced the injured Hyam just past the hour in Blues’ first change, Smith showing good awareness to quell the danger as Clucas threatened.
Arsenal loanee Chuba Akpom entered the fray for Hernandez as Steve Bruce freshened his frontline, Chambers covering well to clear after Moses Odubajo got clear down the right.
Town responded with Knudsen’s cross stretching the Tigers’ defence, then Douglas latching on to the loose ball on the edge of the box but he couldn’t get his shot in.
Pringle made way for Luke Varney for the closing stages, Town then winning a free-kick 30 yards out after Bru was fouled, Pitman curling a right footer wide.
Murphy headed wide from Chambers’ cross as Town pushed for an equaliser, Varney going down in the box as he challenged for a cross, referee Brendan Malone not interested.
Sears and Smith both went close in added on time as Blues looked to salvage a point but Hull held on to strengthen their promotion credentials.