The star-studded lineup, including Grammy nominee Adele, Josh Groban and Faith Hill, will honor Diamond as MusiCares Person of the Year on Friday night.
"It's a double-whammy," Diamond said. "I get a chance to help raise a lot of money and a little plaque that says, `Hey, you're OK.'"
Diamond deliberately stayed away from rehearsals so he would be surprised as the show unfolds.
"I love the idea of other people singing my songs. They'll do it their own way," Diamond said by phone from his recording studio in Los Angeles. "I let them pick whichever ones they wanted."
There's plenty to choose from, like "Solitary Man," "Cherry, Cherry," "Sweet Caroline," "Cracklin' Rose," and the hit he wrote for the Monkees, "I'm A Believer."
Diamond and his band will cap the evening that raises money for the Recording Academy's charity with their own performance in front of an audience that includes his four grown children.
He also plans to check out a display honoring him at the new Grammy museum next to Staples Center.
For much of Diamond's nearly 50-year career, his music has been criticized as middle-of-the-road. Yet he remains a popular concert draw, with last year's "Home Before Dark" tour drawing several generations of fans.
"I hear stories all the time of people who grew up with some of these songs," he said. "I love hearing that what I'm doing in the quiet solitude of my mind with a guitar can actually make an impact on somebody's life, make them reflective, give them a memory. I want to do it for another 42, 43 years."
Despite major changes in the music industry since Diamond began working on New York's Tin Pan Alley writing songs for $50 a week, one thing remains the same.
"I've always thought the record business was based on the artist and the work that they do," he said. "It's still the guy in front of the microphone singing. It's still the songwriter working alone for weeks and months trying to flush out an idea that's worthwhile. These have always been the basic elements."
Today, Diamond stores bits of songs in progress on his iPod.
"I carry it around and I can work on a song pretty much anywhere I am," he said. "I don't use it for listening too much."
Diamond will perform during Sunday's Grammys telecast at Staples Center, his first time singing on the show since 1980 when he and former high school classmate Barbra Streisand famously dueted on "You Don't Bring Me Flowers."