The incorporation of H2 into Ar plasma was observed to markedly alter the microstructure of diamond films. The addition of a small percentage of H2 (<1.5%) into the Ar plasma leads to the presence of stacking faults in plate-like diamond grains, the incorporation of 75% H2 induces the formation of the diamond polymorph (8H). Optical emission spectroscopy indicated that addition of H2 into the Ar/CH4 plasma decreased the CH/C2 ratio and increased the proportion of atomic hydrogen. The small proportion of atomic hydrogen in 1.5%H2–Ar plasma can only induce the formation of (111) stacking faults, resulting in scarcely distributed plate-like diamond grains. The large proportion of atomic hydrogen in 75%H2–Ar plasma causes the rapid growth of diamond grains, leading to the formation of polymorphs of diamond lattices. The tuning on the microstructure of the UNCD films by incorporating either small or large amounts of H2 in Ar-plasma can be attributed to the interaction of H-species with the grain boundary hydrocarbons. Such a capability opens up the potential for applications of UNCD films. Despite the complication in granular structure resulted from the CH4/(Ar–H2) plasma chemical vapour deposition, the formation of microstructures can be explained by the same pathway, the competition of the processes (i) formation of a hydrocarbon passivation layer and the re-activation of the hydrocarbon layer and (ii) secondary nucleation and the enlargement of diamond grains.