Kimberlite-like rocks and minor diamond finds are reported in the Precambrian Ukrainian Shield south of the Donets Basin. Prolific mercury-antimony mineralization occurs in Carboniferous quartz arenites within the Basin. The tectonic setting is examined on the basis of recent data compilations and ongoing research in the Ukraine and Voronezh shield areas and the Pripyat-Dnieper-Donets palaeorift. In the Donets region, a straightforward analogy of any diamond district with the Archangelsk province is not likely in the absence of a Proterozoic shear comparable with the White Sea-Belomorian Mobile Belt. A deep-reaching, NNW-striking lithosphere lineament is identified here as the Kharkov-Donetsk lineament. It transects the rift between the Donets and Dnieper basins. The structures involved in this lineament have controlled Palaeozoic sedimentation and the extent of Late Permian inversion of the Donets basin. During the inversion, the lineament and associated deep-reaching longitudinal structures provided pathways for the migration of mineralizing fluids from deep levels in the lower crust and upper mantle. The intersection, in the Kharkov area, of this lineament with a northeasterly striking lithosphere root should focus diamond exploration towards the northern shoulders of the rift. The extreme attenuation of the crust beneath the Donets Basin, relative to the western basins of the rift, is associated with crustal detachment and subsidence during and possibly after inversion, concomitant with emplacement of asthenospheric materials at higher levels. Together with the continued subsidence in the western Donets Basin, during the Late Permian inversion, this invokes a tectonic setting for the HgSb mineralization not unlike the orogenic-collapse-associated settings of HgSb deposits in western Europe. Further investigation of the geodynamics of the Donets Basin would benefit from deep reflection seismics, petrogenetic studies of magmatic products and their xenoliths, and satellite remote sensing analysis.