In this study, we attempted to unravel the physicochemical grounds of the effect of water additive on diamond crystallization from a conventional metal-carbon system at high-pressure and high-temperature conditions. The microstructure and chemical state of carbon inclusions remained in a Ni–Fe alloy after the synthesis experiments at 6 GPa and 1370 °C with H2O additive of 0.18 and 0.53 wt% were examined by methods of scanning electron microscopy, X-ray photoelectron and near-edge X-ray absorption fine structure spectroscopy. It was found, that at the larger H2O concentration, the residual Ni–Fe–C system is enriched by sp2–hybridized carbon and oxygenated carbon, mainly in the carboxyl form. Our results suggest that formation of double bonds between carbon and oxygen atoms terminates tetrahedral hybridization of carbon, which is a necessary condition for nucleation and growth of diamond crystal, and promotes the formation of graphite-like phase. Thus, this study gives insight into the mechanism of diamond nucleation and growth in the presence of water in the metal-carbon melt.