The negative differential resistance that has been observed in the current-voltage characteristics of some metal-insulator-metal (MIM) diodes is investigated theoretically. A refined theory, involving the stimulated inelastic tunneling of electrons through the diode's insulating layer, is developed to explain the negative resistance. Electrons can tunnel inelastically through the insulating layer by emitting surface plasmons. It is shown that if the diode structure forms a resonant cavity of the proper frequency and sufficiently high <tex xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">Q</tex> -factor, the effect of emitted plasmons can be contained long enough to stimulate additional inelastic tunneling. Second order perturbation theory is used to derive an equation for the current-voltage characteristic of an MIM diode exhibiting negative differential resistance. Numerical calculations show that a <tex xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">Q</tex> -factor of <tex xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">10^{2}-10^{4}</tex> is required to match the theoretical results to published current-voltage characteristics of MIM diodes with negative differential resistance.