Graphite-based metal transition-layer substrates hold great potential for preparing large-area diamond films and achieving crack-free release. In this study, a five-inch crack-free free-standing diamond film was prepared on a graphite substrate with a sacrificial Mo/Ti double-layer transition layer using direct-current arc plasma jet chemical vapor deposition (DC jet CVD). The interfacial bonding and diffusion behavior between the diamond and the transition layers were investigated. The effect of abundant metal particles and elemental diffusion between layers on film adhesion and stress release are discussed and analyzed. The surface of Ti layer prepared by the multi-arc ion-plating contains numerous metal particles that provide a template for the fine-crystalline Mo layer. Metal particles are encapsulated and embedded in the diamond and act as anchors that ensure the stability of the substrate–diamond bond during high-temperature deposition. After deposition, those metal particles act as weak points and play crucial stress-release roles. Mutual elemental diffusion occurs between the Ti, Mo, and diamond layers. Ti penetrates the Mo layer to form a continuous 140-nm-thick thin layer during the initial deposition period, facilitating diamond nucleation. Carbon from the plasma and diamond diffuses into the metal transition layer. Thermal stress generated between the diamond and the graphite substrate is released by destroying the metal transition layer with high thermal expansion coefficient and low elastic modulus during cooling from the deposition temperature. Cracks rapidly propagate along the interface between destroyable transition layers and graphite substrate, which results in the liftoff of a fully crack-free diamond film.