In general terms, the less color a diamond has the more valuable it is. Natural diamonds have a wide range of colors ranging from completely colorless (the most desirable) to slightly yellow, or brown. Diamonds considered fancy color diamonds come in concentrated colors like pink, yellow, and blue, but are graded on a different scaling system.
The color grading system for natural diamonds uses the letters of the alphabet from D through Z, with "D" representing the least color and therefore the rarest and most valuable, and "Z" having the most color within a normal range, and being the least expensive. It is hard for the naked eye to see variations in color grades D through J unless the stones are being looked at side by side.
Diamonds should be color-graded under exacting conditions by an expert grader using specially filtered cool white light. They should be compared to a set of diamonds with known colors, graded by the Gemological Institute of America (G.I.A.) against their master set. To obtain the most accurate color grade, graders usually place diamonds on their sides or upside-down against a neutral background, to help decrease the play of spectral colors that diamonds reflect.
Here is a diagram showing how a diamond's color is graded: