SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )

Check the appropriate box:

( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

DIAGNON CORPORATION
(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

(X) No fee required

( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

4) Proposed maximum aggregate value of transaction:

5) Total fee paid:

( ) Fee paid previously with preliminary materials.

( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

2) Form, Schedule, or Registration Statement No.:

3) Filing Party:

4) Date Filed:

DIAGNON CORPORATION
9600 Medical Center Drive
Rockville, Maryland 20850

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

October 28, 1998

The Annual Meeting of Shareholders of Diagnon Corporation (the "Company"), a
Delaware corporation, will be held at the Holiday Inn Gaithersburg, #2
Montgomery Village Avenue, Gaithersburg, Maryland, on October 28, 1998 at 10:00
a.m. for the following purposes:

1. To elect four directors each to hold office until the next Annual
Meeting of shareholders or otherwise as provided in the By-Laws;

2. To approve the appointment of Deloitte & Touche LLP as independent
public accountants for the Company;

3. To transact such other business as may properly come before the
meeting or any adjournment thereof.

The Board of Directors has fixed the close of business on September 8, 1998, as
the record date for the determination of shareholders entitled to notice of and
vote at the Annual Meeting.

A list of shareholders of the Company entitled to vote at the Annual Meeting
will be available for examination by shareholders of the Company at the offices
of the Company, 9600 Medical Center Drive, Rockville, Maryland, during the ten
days immediately preceding the date of the Annual Meeting.

The Annual Report to Shareholders for the year ended May 31, 1998, accompanies
this notice.

Shareholders who do not expect to attend the meeting in person are urged to fill
out, sign and mail promptly, the enclosed form of proxy.

Michael P. O'Flaherty
Secretary

Rockville, Maryland
September 23, 1998

DIAGNON CORPORATION
9600 Medical Center Drive
Rockville, Maryland 20850

PROXY STATEMENT

This proxy statement is furnished in connection with the solicitation by Diagnon
Corporation (the "Company") of proxies to be voted at the Annual Meeting of the
shareholders to be held at the Holiday Inn Gaithersburg, #2 Montgomery Village
Avenue, Gaithersburg, Maryland, on October 28, 1998, at 10:00 a.m., or at any
adjournment thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting. Shares represented by duly executed proxies at the meeting will
be voted at the meeting. Where shareholders specify in the proxy a choice with
respect to any matter to be acted upon, the shares represented by such proxies
will be voted as specified. A shareholder who signs and returns a proxy in the
accompanying form may revoke it at any time before it is voted.

The Company, at the close of business on September 8, 1998, the record date for
determination of shareholders entitled to vote at the meeting (the "Record
Date"), had outstanding 899,672 shares of Common Stock, par value one Cent
($0.01) per share, each share being entitled to one vote with respect to each
matter to be voted on at the meeting. Votes submitted prior to the Annual
Meeting by proxy will be counted by the Company's transfer agent, Registrar and
Transfer Company, and the results will be provided to the Company prior to the
Annual Meeting. Shares voted by shareholders present at the meeting will be
tabulated manually by the inspector of elections and added to the totals
provided by Registrar and Transfer Company. Abstentions by proxy or in person
will be counted as present for the purposes of determining whether a quorum is
present. Abstentions will be counted as votes against the matter being voted
upon. Proxies submitted by brokers that do not indicate whether an item is being
voted for will be voted in favor of such item.

The solicitation of proxies is made by and on behalf of the Board of Directors
of the Company. This statement is being mailed to the shareholders on or about
September 23, 1998.

SECURITY OWNERSHIP

To the knowledge of the Company on the Record Date, the only persons known to
hold more than 5 percent of the Common Stock of the Company are:

Amount and
Nature of Percent
Beneficial of
Beneficial Owner Ownership Class (1)
---------------- ---------- ---------

John C. Landon 196,298 (2)(3) 21.19

S. David Leibowitt 178,506 (4) 11.00
2295 South Ocean Blvd.
Palm Beach, FL 33480

J. Thomas August 178,506 (5) 19.80

David H. Bishop 60,510 (6) 6.73
100 W. 57th St.
New York, NY 10019

(1) Assumes the exercise by such person or persons of the currently exercisable
options owned by him or them and does not give effect to any shares issuable
upon exercise by any other person or persons of options.

(2) Includes 6,888 shares in the names of members of Dr. Landon's family.

(3) Assumes the exercise of currently exercisable options to purchase 26,667
shares.

(4) Includes 10,833 shares in the name of S. David Leibowitt's spouse.

(5) Assumes the exercise of currently exercisable options to purchase 1,667
shares.

(6) Includes 1,506 shares in the name of David H. Bishop's spouse.

The Company has been advised that the shares of Common Stock owned by Dr. August
and Dr. Landon will be voted in favor of the four nominees for director, and in
favor of all propositions set forth below.

ITEM 1- ELECTION OF DIRECTORS

Four persons have been nominated for election as directors to serve until the
next Annual Meeting of shareholders and until their respective successors are
duly elected and qualified. In the absence of a contrary specification, the
enclosed proxy will be voted FOR the election as directors of the persons named
below. If any nominee becomes unavailable as a candidate for election for any
reason, it is intended that votes will be cast for a substitute nominee
designated by the Board of Directors. The Company has no reason to believe that
any nominees named below will be unable to serve if elected.

All four of the nominees currently are directors of the Company. J. Thomas
August has been a director of the Company since 1982, John C. Landon has been a
director since 1986, Charles C. Francisco has been a director since 1991, and
Charles F. Gauvin has been a director since 1992. The terms of all four
directorships will run from October, 1998, to the next Annual Meeting of the
Company's shareholders. Election of the four (4) nominees will require the
affirmative vote of the holders of a plurality of the shares of the Company's
Common Stock present in person or represented by proxy at the Annual Meeting.

The following table sets forth the name and principal occupation of each
nominee, the period without interruption for which he has been a director of the
Company, the names and titles of the Executive Officers of the Company, and the
amount and percent of class of stock of the Company beneficially owned by each
nominee, each Executive Officer, and the Executive Officers and Directors as a
group as of the Record Date. Unless otherwise indicated, beneficial ownership
consists of sole voting and investment power.

Director of
Company
Principal Occupation Without Nature of Percent
& Business Experience Interruption Beneficial of
Name and Address Age Past Five Years Since Ownership Class Class (1)
- ---------------- --- --------------------- ------------ ---------- ----- ---------

John C. Landon 61 Nominee; Chairman of the 1986 196,298 Common 21.19
9600 Medical Ctr. Dr. Board (since February, sole (2)(3)
Rockville, MD 20850 1987) & CEO & President 6,888
(since 1986) of the joint
Company. President of
BIOQUAL, Inc.
("BIOQUAL"), a subsidiary
of the Company.

Charles C. Francisco 60 Nominee; from July 1998 1991 3,334 0.3
25 Ridge Creek Trail CEO and Managing sole(4)
Moreland Hills, OH 44022 Member of EdgeOne, LLC,
Milford, MA; from 1993-
1998 President, CEO & a
Director of Victoreen, Inc.,
Cleveland, OH, a
manufacturer of radiation
measuring instrumentation;
from 1992 to 1995, Director
of Environmental
Restoration Systems, Inc.,
Middletown, PA, pollution
removal equipment makers;
in 1996, was a Director of
R.E. Wright Environmental,
Inc., Middletown, PA, an
earth resources consulting
company.

J. Thomas August 71 Nominee; Prof. & Director 1982 178,506 Common 19.80
School of Medicine of the Dept. of sole(5)
Johns Hopkins Univ. Pharmacology and
725 N. Wolfe St. Molecular Sciences at The
Baltimore, MD 21205 Johns Hopkins Univ. School
of Medicine, Baltimore, MD
for more than five years.

Charles F. Gauvin 43 Nominee; currently 1992 3,334 Common 0.3
Trout Unlimited President and CEO and sole(4)
1500 Wilson Blvd. from 1991 to 1994
Arlington, VA 22209 Executive Director of Trout
Unlimited, Arlington, VA, a
nonprofit organization
dedicated to protection and
conservation of trout and
salmon and their habitats;
from 1986-1991, associated
with the law firm of
Beveridge & Diamond, P.C.,
Washington, D.C.

Michael P. O'Flaherty 60 Company Secretary and 18,168 Common 1.98
Diagnon Corporation Corporate Vice President sole(6)
9600 Medical Center Dr. since June, 1988, and Chief
Rockville, Maryland 20850 Operating Officer since
June, 1994; Mr. O'Flaherty's
duties for the Company
include most functions of
general management.

Jerry R. Reel 60 Appointed as Vice President 1,834 Common 0.2
BIOQUAL, Inc. of the Division of sole(8)
9600 Medical Center Dr. Reproductive Endocrinology
Rockville, Maryland 20850 and Toxicology in June
1997, Vice President,
Science, of BIOQUAL since
October, 1991; private
consultant from 1989 to
1990.

Richard P. Bradbury 63 Appointed as Vice President 2,335 Common 0.26
BIOQUAL, Inc. of the Division of Primate sole
2501 Research Blvd. Biology and Medicine in (7)(9)
Rockville, MD 20850 June 1997, Vice President
of the Company's SEMA
subsidiary in November, 1989;
concurrent with the merger
of SEMA into BIOQUAL in 1991,
was appointed Vice President
of the Research Blvd. Division
of BIOQUAL.

David A. Newcomer 37 Appointed Company Acting 2,668 Common .03
Diagnon Corporation Controller in May, 1989, sole(9)
9600 Medical Center Dr. Controller in June, 1990,
Rockville, MD 20850 and Chief Financial Officer
in June 1994; Mr. Newcomer's
duties include the management
of the Company's financial
functions.

All Executive Officers and 406,477 Common 41.9
Directors as a group (9 (11)
Persons)(2)(3)(4)(5)(6)(7)(8)(9)

(2) Includes 6,888 shares in the names of members of Dr. Landon's family, as to
which he retains beneficial ownership.

(3) Assumes the exercise of currently exercisable options to purchase 26,667
shares.

(4) Assumes the exercise of currently exercisable options to purchase 3,334
shares.

(5) Assumes the exercise of currently exercisable options to purchase 1,667
shares.

(6) Assumes the exercise of currently exercisable options to purchase 17,502
shares.

(7) Assumes the exercise of currently exercisable options to purchase 1,834
shares.

(8) Assumes the exercise of currently exercisable options to purchase 2,335
shares.

(9) Assumes the exercise of currently exercisable options to purchase 2,668
shares.

(10) See Notes (2) through (9) above.

THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES OF THE BOARD

The Board of Directors held three meetings in fiscal year 1998. All board
members were present at each meeting. The Board has established two committees,
the Compensation Committee and the Audit Committee.

The Compensation Committee (currently consisting of Messrs. Francisco and
Gauvin) meets as necessary to determine Dr. Landon's compensation. Dr. Landon
determines the compensation of the Company's other employees. The Compensation
Committee had three formal meetings during fiscal year 1998.

The responsibilities of the Audit Committee (currently consisting of Messrs.
Francisco and Gauvin) include recommending to the full Board the selection of
the Company's independent public accountants, discussing the arrangements for
the proposed scope, and the results of the annual audit with management and the
independent public accountants; reviewing the scope of non-audit professional
services provided by the independent public accountants; obtaining from both
management and the independent public accountants their observations on the
Company's system of internal accounting controls; and reviewing the overall
activities and recommendations of the Company's internal auditors. There was one
formal meeting of the Audit Committee in fiscal year 1998.

Messrs. Francisco, August and Gauvin have agreements with the Company extending
through the term of their election. The agreements for Messrs. Francisco, August
and Gauvin provide for quarterly payments of $ 1,000 each as directors fees and
payments of $500 for attendance at Board of Directors meetings. The agreement
with Dr. August also provides payments of $2,500 per quarter for services
rendered to the Company as Scientific Adviser. The Company also reimburses
Company related travel expenses incurred by any of the directors.

During fiscal year 1998, the Company paid the following cash compensation to
directors:

Directors Attendance of Board Travel to
Fees Meetings Board
Meetings and Consultation Meetings

Dr. J. Thomas August $4,000 $11,500 $ 35
Charles C. Francisco 4,000 1,500 561
Charles F. Gauvin 4,000 1,500 143

REMUNERATION OF EXECUTIVE OFFICERS AND RELATED MATTERS

The following table sets forth information with respect to remuneration paid
during the last three fiscal years to the Chief Executive Officer and the other
Company Officers whose compensation exceeded $ 100,000.

Name and Principal Salary Bonus Other Annual Compensation
Position Year ($) ($) ($) (1,2,3)
- ------------------ ---- ------ ----- -------------------------

John C. Landon 1998 275,000 32,723
CEO, President, Chairman 1997 160,000 101,863 32,723
of the Board 1996 160,000 116,946 32,723

Michael P. O'Flaherty 1998 122,085 36,444 10,593
Chief Operating Officer, 1997 116,690 21,660 10,593
Secretary 1996 120,818 11,944 10,593

Jerry R. Reel 1998 111,282 3,926
Vice President, BIOQUAL, 1997 118,614 9,179
Inc., Subsidiary 1996 109,481 2,949

Richard P. Bradbury 1998 97,130 8,372
Vice President, BIOQUAL, 1997 99,573 4,000
Inc., Subsidiary 1996 99,205 3,102

David A. Newcom 1998 83,412 19,430 4,500
Chief Financial 1997 78,202 6,592 3,750
1996 78,192

(1) Other annual compensation for the CEO for the years 1998, 1997, and 1996
represents premiums for a $1,000,000 Split Dollar Life Insurance Policy.
(2) Other annual compensation for the Chief Operating Officer for the years 1998
and 1997 represents premiums for a $250,000 Split Dollar Life insurance
Policy.
(3) Other Annual Compensation for the Chief Financial Officer for the years 1998
and 1997 represents premiums for a $250,000 Split Dollar Life Insurance
Policy.

Dr. Landon has an employment agreement with the Company, extending through July
13, 2002. Pursuant to this agreement, Dr. Landon's base compensation is $275,000
per year. The agreement provides for various additional incentive compensation
dependent upon the results of the Company's operations each year through the
term of employment.

On June 1, 1988 the Company and Dr. Landon agreed to consolidate the previous
loan facilities available to Dr. Landon into a single loan of $100,000. The
consolidated loan had a five year term with repayment of principal deferred for
three years. The loan bore interest at the six month

certificate of deposit rate paid by Signet Bank, Maryland, and the rate was
adjusted quarterly. On September 29, 1989, the Company agreed to increase the
loan to $125,000. On September 21, 1990, the Company agreed to increase the loan
to $150,000. Under Dr. Landon's employment agreement (as amended), the loan was
to be repaid in five installments of $30,000 plus interest within six weeks
after the end of each of the next five fiscal years beginning with fiscal year
1992.

The largest amount owed by Dr. Landon during the fiscal year ended May 31, 1998,
with respect to his loan facilities was $90,000, excluding interest accrued
amounting to $17,505. There was no addition to the loan during this fiscal year.
On July 1, 1994, Dr. Landon made a payment of $2,745 on accrued interest. On
June 6, 1994, the Company agreed to defer Dr. Landon's third $30,000 repayment
and make the payment due as two $15,000 installments paid with the fourth and
fifth $30,000 repayments respectively. On October 11, 1995, the Company's
shareholders affirmatively voted to approve the purchase of Company's stock from
Dr. Landon at market value to fund repayment by Dr. Landon of the remainder of
the Company loan. As of September 13, 1997, that transaction has not occurred.
In October of 1996, the Board of Directors affirmatively voted to extend the due
date of the loan, maintaining all other terms and conditions, until October 31,
1998. As of July 24, 1998, neither the stock purchase or the loan repayment
transaction have occurred.

ITEM 2 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors recommends the ratification of the firm of Deloitte &
Touche LLP as independent public accountants for fiscal year 1999. As in prior
years, representatives of Deloitte & Touche LLP will be present at the Annual
Meeting with the opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions raised at the meeting.

Deloitte & Touche LLP has audited the financial statements of Diagnon since
1982. Services provided in connection with the audit function by Deloitte &
Touche LLP for the fiscal year 1998 included primarily the examination of
Diagnon consolidated financial statements, and the review of filings with the
Securities and Exchange Commission.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DELOITTE & TOUCHE
LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR 1999. PROXIES
SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY A CONTRARY
CHOICE ON THE PROXY CARD.

SHAREHOLDER PROPOSALS
Shareholders who wish to submit proposals at a the next Annual Meeting of
shareholders should submit such proposals to the Company at its headquarters at
9600 Medical Center Drive, Rockville, Maryland 20850. Such proposals must be
received by the Company by June 3, 1999.

The Company will not be required to include in its Proxy Statement or form of
proxy, a shareholder proposal which is received after that date or which
otherwise fails to meet requirements for shareholder proposals established by
regulations of the Securities and Exchange Commission.

OTHER MATTERS

The expense of preparing, assembling, printing and mailing the form of proxy
material used for the solicitation of proxies by use of mails will be borne by
the Company. The Company has not retained any firm to solicit proxies on behalf
of the Company. Company directors and officers of the Company may solicit
proxies in person or by telephone and may request brokerage houses and other
custodians, nominees and fiduciaries to forward soliciting material to
beneficial owners of Common Stock. So far as the Board of Directors is aware,
only the aforementioned matters will be acted upon at the meeting. If any other
matters properly come before the meeting, it is intended that the accompanying
proxy may be voted on such matters in accordance with the best judgment of the
person or persons voting said proxy.

THE COMPANY'S REPORT ON FORM 10-KSB FOR ITS FISCAL YEAR ENDED MAY 31, 1998,
ACCOMPANIES THIS PROXY STATEMENT. UPON THE WRITTEN REQUEST OF A SHAREHOLDER OF
THE COMPANY ADDRESSED TO MICHAEL P. O'FLAHERTY, SECRETARY OF THE COMPANY, AT
9600 MEDICAL CENTER DRIVE, ROCKVILLE, MARYLAND 20850, THE COMPANY WILL PROVIDE
WITHOUT CHARGE TO SUCH SHAREHOLDER A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10-KSB FOR ITS FISCAL YEAR ENDED MAY 31, 1998, INCLUDING THE FINANCIAL
STATEMENTS AND FINANCIAL STATEMENT SCHEDULES REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 13a-A UNDER THE SECURITIES
EXCHANGE ACT OF 1934.

By Order of the Board of Directors

John C. Landon
Chairman of the Board and Chief Executive Officer

COMMON STOCK PROXY

DIAGNON CORPORATION
ANNUAL MEETING OF STOCKHOLDERS, OCTOBER 28, 1998

The undersigned hereby appoints John C. Landon and Michael P. O'Flaherty
and each of them, with power of substitution in each, as proxies or proxy to
represent the undersigned at the Annual Meeting of the Stockholders of Diagnon
Corporation (the "Company") to be held at the Holiday Inn Gaithersburg, #2
Montgomery Village Avenue, Gaithersburg, Maryland, on Wednesday, October 28,
1998, at 10:00 a.m., local time, and at any adjournment or adjournments hereof,
and to vote the number of shares of Common Stock which the undersigned would be
entitled to vote if personally present, (a) in the manner designated on the
reverse side thereof with respect to the election of directors and the other
identified proposals and (b) in their discretion on such other matters as may
properly come before the meeting or any adjournments thereof.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted "For" all nominees and
proposals listed on the reverse side hereof.

DIAGNON CORPORATION Annual Meeting
Of Stockholders
Wednesday, October 28, 1998
10:00 a.m.
The Holiday Inn Gaithersburg
#2 Montgomery Village Avenue
Gaithersburg, Maryland

STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING AND DESIRE TO HAVE THEIR
STOCK VOTED AT THE MEETING ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ABOVE
PROXY ON THE REVERSE SIDE AND RETURN THE SAME IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.

1. ELECTION OF DIRECTORS: J. Thomas August, M.D., Charles C. Francisco,
Charles F. Gauvin, John C. Landon, Ph.D.

FOR ALL NOMINEES WITHHOLD (To withhold authority to vote for any individual
listed except as AUTHORITY nominees, write the name of such nominee(s)
otherwise indicated to vote for all on the following line.)
with respect to nominees listed
individual nominees

[ ] [ ] ________________________________________________

2. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS:
Ratification of the selection of Deloitte and Touche LLP as the Company's
independent public accountants.

FOR AGAINST ABSTAIN

[ ] [ ] [ ]

Dated: __________________________________________________________

__________________________________________________________

__________________________________________________________
Signature(s)
Please sign exactly as your name appears on this
proxy. When signing as attorney, executor, administrator,
trustee, guardian, etc. or as an officer of a corporation,
give full title. For joint accounts obtain both signatures.