Selective laser melting (SLM) is an effective and potential technology to prepare metal-matrix diamond composites (MDC). In this study, balling phenomenon and graphitization of diamond of CuSn10-diamond composites by SLM were investigated. By univariate analysis of laser power and scanning speed on the morphology of single track, the balling phenomenon is directly affected by the flowability and wettability of the molten pool. By introducing the concept of laser energy density, balling and diamond graphitization are quantitatively evaluated by the standard deviation σ of surface balling height and IG: ID value, respectively. Balling degree increases with laser energy density, but diamond-graphitization turns out to be the opposite. The CuSn10-diamond composites with low balling and no diamond-graphitization can be obtained at moderate laser energy density of 0.17 J/mm. In terms of performances, bending strength is mainly affected the defects caused by balling, and wear properties is determined by the graphitization of diamond abrasives. Graphitization of diamond results in the transformation of wear mechanism from abrasive to adhesive wear. The optimal properties of 185.36 MPa in bending strength, 0.41 in coefficient of friction and minimum wear loss is obtained in the composite sample prepared at 0.17 J/mm.