Ni-coated diamond grits are widely used in resin-bonding diamond tools for that nickel coating could not only increase the surface roughness, but also improve retention of the diamond in the bond. However coating nickel on diamond surface is too expensive for the high price of metal nickel. In order to obtain cost-effective coating, barrel-plating method was used to coat nickel-iron alloy on the diamond surface in this paper. Nickel-iron alloy coating with iron content of 13.62~17.25wt% has been obtained and the iron content in the alloy coating can be adjusted by the content of Fe2+ in the electrolyte. Compared with the uncoated-diamond, the compressive fracture strength (CFS) of coated diamond tested by single grit method has a distinct increase and it becomes higher as the iron content increases in the coating. The coating possesses ferromagnetism and the magnetic intensity of alloy coating with high iron content is larger than that with low iron content.