diff --git a/Dockerfile b/Dockerfile
index dc0869d0ed05..1b9ea90f22f9 100644
--- a/Dockerfile
+++ b/Dockerfile
@@ -11,7 +11,7 @@ ARG TARGETARCH
 ARG TARGETVARIANT
 
 ENV BUILD_TYPE=${BUILD_TYPE}
-ENV EXTERNAL_GRPC_BACKENDS="huggingface-embeddings:/build/extra/grpc/huggingface/huggingface.py,autogptq:/build/extra/grpc/autogptq/run.sh,bark:/build/extra/grpc/bark/run.sh,diffusers:/build/extra/grpc/diffusers/backend_diffusers.py,exllama:/build/extra/grpc/exllama/exllama.py,vall-e-x:/build/extra/grpc/vall-e-x/ttsvalle.py,vllm:/build/extra/grpc/vllm/backend_vllm.py"
+ENV EXTERNAL_GRPC_BACKENDS="huggingface-embeddings:/build/extra/grpc/huggingface/huggingface.py,autogptq:/build/extra/grpc/autogptq/run.sh,bark:/build/extra/grpc/bark/run.sh,diffusers:/build/extra/grpc/diffusers/run.sh,exllama:/build/extra/grpc/exllama/exllama.py,vall-e-x:/build/extra/grpc/vall-e-x/ttsvalle.py,vllm:/build/extra/grpc/vllm/backend_vllm.py"
 ENV GALLERIES='[{"name":"model-gallery", "url":"github:go-skynet/model-gallery/index.yaml"}, {"url": "github:go-skynet/model-gallery/huggingface.yaml","name":"huggingface"}]'
 ARG GO_TAGS="stablediffusion tts"
 
diff --git a/Makefile b/Makefile
index d7c27d04b2bb..93493d59f945 100644
--- a/Makefile
+++ b/Makefile
@@ -382,6 +382,7 @@ protogen-python:
 prepare-extra-conda-environments:
 	$(MAKE) -C extra/grpc/autogptq
 	$(MAKE) -C extra/grpc/bark
+	$(MAKE) -C extra/grpc/diffusers
 
 backend-assets/grpc:
 	mkdir -p backend-assets/grpc
diff --git a/extra/grpc/diffusers/Makefile b/extra/grpc/diffusers/Makefile
new file mode 100644
index 000000000000..270c0c6e7da9
--- /dev/null
+++ b/extra/grpc/diffusers/Makefile
@@ -0,0 +1,11 @@
+.PONY: diffusers
+diffusers:
+	@echo "Creating virtual environment..."
+	@conda env create --name diffusers --file diffusers.yml
+	@echo "Virtual environment created."
+
+.PONY: run
+run:
+	@echo "Running diffusers..."
+	bash run.sh
+	@echo "Diffusers run."
\ No newline at end of file
diff --git a/extra/grpc/diffusers/README.md b/extra/grpc/diffusers/README.md
new file mode 100644
index 000000000000..f91beef69369
--- /dev/null
+++ b/extra/grpc/diffusers/README.md
@@ -0,0 +1,5 @@
+# Creating a separate environment for the diffusers project
+
+```
+make diffusers
+```
\ No newline at end of file
diff --git a/extra/grpc/diffusers/backend_diffusers.py b/extra/grpc/diffusers/backend_diffusers.py
index 693db1fa13c4..9d331f647ec6 100755
--- a/extra/grpc/diffusers/backend_diffusers.py
+++ b/extra/grpc/diffusers/backend_diffusers.py
@@ -1,27 +1,32 @@
 #!/usr/bin/env python3
-import grpc
 from concurrent import futures
-import time
-import backend_pb2
-import backend_pb2_grpc
+
 import argparse
+from collections import defaultdict
+from enum import Enum
 import signal
 import sys
+import time
 import os
 
-# import diffusers
+from PIL import Image
 import torch
-from torch import autocast
+
+import backend_pb2
+import backend_pb2_grpc
+
+import grpc
+
 from diffusers import StableDiffusionXLPipeline, StableDiffusionDepth2ImgPipeline, DPMSolverMultistepScheduler, StableDiffusionPipeline, DiffusionPipeline, EulerAncestralDiscreteScheduler
+from diffusers import StableDiffusionImg2ImgPipeline
 from diffusers.pipelines.stable_diffusion import safety_checker
+
 from compel import Compel
-from PIL import Image
-from io import BytesIO
-from diffusers import StableDiffusionImg2ImgPipeline
+
 from transformers import CLIPTextModel
-from enum import Enum
-from collections import defaultdict
 from safetensors.torch import load_file
+
+
 _ONE_DAY_IN_SECONDS = 60 * 60 * 24
 COMPEL=os.environ.get("COMPEL", "1") == "1"
 CLIPSKIP=os.environ.get("CLIPSKIP", "1") == "1"
diff --git a/extra/grpc/diffusers/diffusers.yml b/extra/grpc/diffusers/diffusers.yml
new file mode 100644
index 000000000000..fb315ab0a44e
--- /dev/null
+++ b/extra/grpc/diffusers/diffusers.yml
@@ -0,0 +1,74 @@
+name: diffusers
+channels:
+  - defaults
+dependencies:
+  - _libgcc_mutex=0.1=main
+  - _openmp_mutex=5.1=1_gnu
+  - bzip2=1.0.8=h7b6447c_0
+  - ca-certificates=2023.08.22=h06a4308_0
+  - ld_impl_linux-64=2.38=h1181459_1
+  - libffi=3.4.4=h6a678d5_0
+  - libgcc-ng=11.2.0=h1234567_1
+  - libgomp=11.2.0=h1234567_1
+  - libstdcxx-ng=11.2.0=h1234567_1
+  - libuuid=1.41.5=h5eee18b_0
+  - ncurses=6.4=h6a678d5_0
+  - openssl=3.0.11=h7f8727e_2
+  - pip=23.2.1=py311h06a4308_0
+  - python=3.11.5=h955ad1f_0
+  - readline=8.2=h5eee18b_0
+  - setuptools=68.0.0=py311h06a4308_0
+  - sqlite=3.41.2=h5eee18b_0
+  - tk=8.6.12=h1ccaba5_0
+  - tzdata=2023c=h04d1e81_0
+  - wheel=0.41.2=py311h06a4308_0
+  - xz=5.4.2=h5eee18b_0
+  - zlib=1.2.13=h5eee18b_0
+  - pip:
+      - accelerate==0.23.0
+      - certifi==2023.7.22
+      - charset-normalizer==3.3.0
+      - compel==2.0.2
+      - diffusers==0.21.4
+      - filelock==3.12.4
+      - fsspec==2023.9.2
+      - grpcio==1.59.0
+      - huggingface-hub==0.17.3
+      - idna==3.4
+      - importlib-metadata==6.8.0
+      - jinja2==3.1.2
+      - markupsafe==2.1.3
+      - mpmath==1.3.0
+      - networkx==3.1
+      - numpy==1.26.0
+      - nvidia-cublas-cu12==12.1.3.1
+      - nvidia-cuda-cupti-cu12==12.1.105
+      - nvidia-cuda-nvrtc-cu12==12.1.105
+      - nvidia-cuda-runtime-cu12==12.1.105
+      - nvidia-cudnn-cu12==8.9.2.26
+      - nvidia-cufft-cu12==11.0.2.54
+      - nvidia-curand-cu12==10.3.2.106
+      - nvidia-cusolver-cu12==11.4.5.107
+      - nvidia-cusparse-cu12==12.1.0.106
+      - nvidia-nccl-cu12==2.18.1
+      - nvidia-nvjitlink-cu12==12.2.140
+      - nvidia-nvtx-cu12==12.1.105
+      - packaging==23.2
+      - pillow==10.0.1
+      - protobuf==4.24.4
+      - psutil==5.9.5
+      - pyparsing==3.1.1
+      - pyyaml==6.0.1
+      - regex==2023.10.3
+      - requests==2.31.0
+      - safetensors==0.4.0
+      - sympy==1.12
+      - tokenizers==0.14.1
+      - torch==2.1.0
+      - tqdm==4.66.1
+      - transformers==4.34.0
+      - triton==2.1.0
+      - typing-extensions==4.8.0
+      - urllib3==2.0.6
+      - zipp==3.17.0
+prefix: /opt/conda/envs/diffusers
diff --git a/extra/grpc/diffusers/run.sh b/extra/grpc/diffusers/run.sh
new file mode 100644
index 000000000000..4a47783d46ed
--- /dev/null
+++ b/extra/grpc/diffusers/run.sh
@@ -0,0 +1,10 @@
+##
+## A bash script wrapper that runs the diffusers server with conda
+
+# Activate conda environment
+source activate diffusers
+
+# get the directory where the bash script is located
+DIR="$( cd "$( dirname "${BASH_SOURCE[0]}" )" >/dev/null 2>&1 && pwd )"
+
+python $DIR/backend_diffusers.py
\ No newline at end of file