DIOMED HOLDINGS SIGNS $10 MILLION EQUITY FINANCING
          Current Preferred Stock Holders to Tender Existing Shares for
                       Shares of New Series of Preferred


ANDOVER, MA-- July 27, 2006 --Diomed Holdings, Inc. (AMEX: DIO), a leading
developer and marketer of minimally invasive medical technologies, including its
patented EndoVenous Laser Treatment (EVLT(R)) for varicose veins, today
announced that it has reached agreement with investors for a $10 million private
placement of a new series of its preferred stock. As part of the announced round
of financing, all holders of the existing shares of convertible stock will
tender their existing preferred shares for shares of the new series of preferred
stock.

The shares of the new series of preferred stock to be issued in the private
placement are exchangeable into approximately 8.7 million shares of Diomed's
common stock, resulting in an effective price of $1.15 per common share. The
shares of the new series of preferred stock will be issued without warrants
attached and provide for no dividends except in the event of a future dilutive
equity issuance. Diomed has also agreed to issue shares of its new series of
preferred stock in exchange for approximately 4 million shares of existing
preferred stock to be tendered at closing by the existing preferred
stockholders. The existing preferred shares are exchangeable by their terms on a
one-for-one basis for 4 million shares of Diomed's common stock, while the new
series of preferred stock will be exchangeable for an aggregate of 8.7 million
shares of Diomed's common stock.

"We are extremely pleased with the terms of the financing," remarked David B.
Swank, Chief Financial Officer of Diomed Holdings, Inc. "We also believe that,
subject to review by the AMEX, this transaction addresses the minimum
stockholders equity concern noted by the Exchange last month. Investors may be
pleased to see that, under this financing, we have been able both to strengthen
and to simplify our balance sheet."

"This financing enhances our ability to drive the growth of our business and to
continue to vigorously protect our intellectual property rights under US patent
law," commented James A. Wylie, Diomed's Chief Executive Officer. "We are
particularly pleased with the participation of a number of premier
medically-oriented institutional investors in this financing, including both new
and existing investors, which we view as confirmation of the market's belief in
Diomed's solid growth potential."

The transaction is subject to certain approvals, including the approval of
Diomed's stockholders, which the Company intends to seek as soon as practicable.
The Company has also agreed to register with the Securities and Exchange within
the 120 days after closing, approximately 17.4 million shares of its Common
Stock that underlie the shares of the new series of preferred stock that it has
agreed to issue. The Company will file a Current Report on Form 8-K containing
complete details of the transaction.



About Diomed

Diomed develops and commercializes minimal and micro-invasive medical procedures
that use its proprietary laser technologies and disposable products. Diomed's
EVLT(R) laser vein ablation procedure is used in varicose vein treatments.
Diomed also provides photodynamic therapy (PDT) for use in cancer treatments,
and dental and general surgical applications. The EVLT(R) procedure and the
Company's related products were cleared by the United States FDA in January of
2002. Along with lasers and single-use procedure kits for its EVLT(R) laser vein
treatment, the Company provides its customers with state of the art physician
training and practice development support. Additional information is available
on the Company's website: www.evlt.com.

EVLT(R) is a registered trademark of Diomed Inc., Andover, MA.

Safe Harbor

This press release does not constitute an offer of any securities for sale.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these transactions or the securities
to be issued in connection with these transactions.

Safe Harbor statements under the Private Securities Litigation Reform Act of
1995: Statements in this news release looking forward in time involve risks and
uncertainties, including the risks associated with trends in the products
markets, reliance on third party distributors in various countries outside the
United States, reoccurring orders under OEM contracts, market acceptance risks,
technical development risks and other risk factors. These statements relate to
our future plans, objectives, expectations and intentions. These statements may
be identified by the use of words such as "may," "will," "should," "potential,"
"expects," "anticipates," "intends," "plans," "believes" and similar
expressions. These statements are based on our current beliefs, expectations and
assumptions and are subject to a number of risks and uncertainties. Our actual
results could differ materially from those discussed in these statements. Our
Annual Report on Form SEC 10-KSB/A (the "Annual Report") contains a discussion
of certain of the risks and uncertainties that affect our business. We refer you
to the "Risk Factors" on pages 23 through 38 of the Annual Report for a
discussion of certain risks, including those relating to our business as a
medical device company without a significant operating record and with operating
losses, our risks relating to our commercialization of our current and future
products and applications and risks relating to our common stock and its market
value. Diomed disclaims any obligation or duty to update or correct any of its
forward-looking statements.

For more information contact:
Christopher J. Geberth, VP Finance        Carney Duntsch
Diomed Holdings, Inc.                     Burns McClellan, Investor Relations
Phone: 866-4DIOMED                        Phone:  212-213-0006
email: cgeberth@diomedinc.com             email :  cduntsch@burnsmc.com
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