The Vajracchedika (Diamond Sutra) is part of the Parjnaparamita literature, a class of Mahayana Sutra that was composed around 500 years after the Buddha.
While much of the Prajnaparamita is extremely long and verbose, the Diamond and Heart Sutras are quite short, crystallizing the essence of the Prajnaparamita philosophy into a brief and palatable form, hence their popularity.
Historically, the Prajnaparamita arose as response to and critique of the Abhidharma. According to this critique, the Abhidharma theorists (primarily of the Sarvastivada school) had lost the point of the Dhamma, priding themselves on their shallow and analytical knowledge, while missing the true taste of deep wisdom and freedom. The key theme of the Prajnaparamita is not-self. They argued that the Abhidharma theorists had turned the Dharma itself into something to be attached to and identified with, rather than as a raft for crossing over.
This is why the Heart Sutra begins by asserting that the five aggregates are “empty of inherent essence”. (pañca-skandhās tāṃś ca svabhāva-śūnyān paśyati) The term “inherent essence” or “own-nature” is a specifically Abhidhammic coinage, appearing first in the late canonical or early post-canonical Abhidharma literature. Thus this literature is criticizing ideas of this period, roughly 300–400 years after the Buddha.
Like the Heart Sutra, the Diamond Sutra is available in translations in Chinese and Tibetan, but in modern times we have also recovered and published the original Sanskrit. The Gilgit text, which was discovered in the deserts of western China, is available on GRETIL.
Throughout this literature, we see that they are constantly echoing the literary and stylistic features of the early sutras. At the same time, though, they introduce new terms, ideas, characters, and phrases, which clearly and unambiguously mark them as later compositions. Given the consistent and stereotypical form of the early suttas, it is extremely easy to make copies of early texts that would pass as authentic, merely changing the doctrine if you feel like it. But that’s not what they did: they clearly mark the texts as late. These changes must have been deliberate, and have been intended to make it clear that these are not literal records of the Buddha’s teachings in the historical sense.
The true sources of Mahayanist inspiration were complex, but at least some sutras speak explicitly of seeing the Buddha in meditation, hearing him teach, and writing and recording his teachings. In any case, it seems clear that the authors of the Mahayana sutras believed that in some sense they were conveying the true meaning of the Buddha’s teachings, but not the literal historical form.
The Mahayana Sutras position themselves in a mythic time. The essence of mythic time is the idea that “these things never were, but always are”. Less poetically, myth speaks of “timeless truths”, things that constantly recur. Because they are timeless, we don’t need to have a historical source for them: they must have happened, regardless of what the evidence might say. The Diamond Sutra, as is the way of mythic storytelling, claims to be set in the distant past, but the text hints at its true historical context. It discusses the question of what happens after 500 years, when according to the early tradition the sasana would come to an end. The Diamond Sutra gets around this by saying that the Bodhisattvas will continue to sustain the sasana. The real concern of the Diamond Sutra is the state of Buddhism in India 500 years after the Buddha.
The Diamond Sutra is one of a series of texts that was analysed on a philosophical perspective by David Kalupahana. Rather than reading it as a sectarian text, he saw it as part of a pan-sectarian tradition that, in different ways in each period of Buddhism, attempted to strip away misinterpretations of the Buddha’s teachings while still affirming the basis of the original teachings. It is a long time since I read his article, but if I recall correctly, his point was that the Diamond Sutra used a threefold critical logic, usually exemplified in this form: “What is called a ‘heap of merit’ is no heap of merit at all. That is why it is said, ‘heap of merit’.” The conventional or realistic interpretation (of the Abhidharmists) is denied, as phenomena have no inherent existence but are empty. Nevertheless, we still use language to refer to these things, but only for the pragmatic purpose of escaping suffering, not because we believe that the words correspond to an actual entity.
There are many translations of the text, but if you want to research the details, I would recommend the text and translation on the Uni of Oslo site here:
It’s not presented in a particularly readable form, but it does seem pretty reliable.
I hope that’s helpful.