Diaz was called it to replace the Brazilian and shocked the world by upsetting McGregor.
McGregor promptly called for a rematch with Diaz and got his revenge on the American in one of the best fights in UFC history.
Diaz has been chasing a third fight ever since, but has been forced to wait as McGregor targetted the UFC Lightweight title, which he won after defeating Eddie Alvarez at UFC 205. McGregor then took a break from fighting for the birth of his first child (Conor McGregor Jr), before switching to boxing to meet Floyd Mayweather.
All the while Diaz has sat on the sidelines, telling the UFC he would not take another fight unless it was with McGregor.
It seems Diaz may now get his wish, but McGregor has detailed the terms he will accept the fight on. Unlike their first two meetings, McGregor will not meet him at welterweight again.
"I'm the 155 pound champion (70kg)," McGregor told BBC News. "I faced him at 170 (77kg), he beat me, I rematched him at 170, I beat him.
"Now I'm the 155 pound champion, now if he wants that fight, he must come down - that's a fair trade."
McGregor, who is a former UFC featherweight champion, says the move is only fair, given the fact Diaz has fought in the lightweight division previously.
"I didn't ask for the rematch at a lower weight," McGregor said. "I asked for the rematch at the exact same weight. I thought that was a fair play move on my behalf and I came in and I won.
"So now I won that and I won the 155 title (70kg) after that, so if he wants the fight he has to make the 155 pound limit."
Meanwhile Diaz has been caught in a backstage slanging match with former UFC heavyweight Brendan Schaub at the Floyd Mayweather-Conor McGregor fight.
Schaub told the Joe Rogan podcast that he approached Diaz backstage to offer him advice in his quest for a third fight with McGregor, but it all went pear shaped.
"Whether he wanted my help or not, I was going towards him," Schaub explained. "I know a few things about marketing, and the next fight for him is Conor (McGregor). I'm assuming he's there (at the fight), to sell that fight. That should be the next fight, Conor vs. Nate Diaz III, that's the trilogy, that's the fight.
"I saw some interviews where he was hating on Conor and I would have spun it the other way.
"He should have celebrated Conor in what he did, winning rounds against the best of all-time, saying 'look, I beat him (McGregor) up worst than Floyd, now we're going to do this trilogy. I'm going to end him faster than Floyd did'. That should be the sell.
"I'm like 'yo Nate, what about that fight, you're next, biggest fight in UFC history brother."
But Diaz was not ready to play friendly with Schaub. Instead, the two traded barbs after Diaz took the ex-fighter to task over his prediction that McGregor would win multiple rounds against Mayweather and go the distance, two things he failed to do.
"He was like 'hell no, how f******* stupid do you look now," Schaub said. "How stupid do you look talking all this s***'.
"He (McGregor) didn't win rounds, he gave him one round. I said Nate, 'I have no issues with you. What are you doing right now, you should be selling this fight with Conor'.
"Showtime (the US network Schaub was working for covering Mayweather-McGregor) was like come on, I was just embarrassed by the situation."
Schaub does agree with McGregor that the Diaz fight should happen at the 155 weight limit for the lightweight title, and he expects the showdown to break the UFC pay-per-view record.
"I think it's their (the UFC) only fight," Schaub said. "Those fights at 170 are a toss up, one and one - they shouldn't be fighting at 170.
"The trilogy fight makes sense for the belt, it will be the biggest pay-per-view of all time. I think it's the only fight that makes sense."
