diff --git a/keras/src/backend/openvino/excluded_concrete_tests.txt b/keras/src/backend/openvino/excluded_concrete_tests.txt
index 6465d75101b..c172a526830 100644
--- a/keras/src/backend/openvino/excluded_concrete_tests.txt
+++ b/keras/src/backend/openvino/excluded_concrete_tests.txt
@@ -21,7 +21,8 @@ NumpyDtypeTest::test_count_nonzero
 NumpyDtypeTest::test_cross
 NumpyDtypeTest::test_cumprod
 NumpyDtypeTest::test_cumsum_bool
-NumpyDtypeTest::test_diag
+NumpyDtypeTest::test_diagflat
+NumpyDtypeTest::test_diagonal
 NumpyDtypeTest::test_diff
 NumpyDtypeTest::test_digitize
 NumpyDtypeTest::test_dot
@@ -101,7 +102,7 @@ NumpyOneInputOpsCorrectnessTest::test_conj
 NumpyOneInputOpsCorrectnessTest::test_correlate
 NumpyOneInputOpsCorrectnessTest::test_count_nonzero
 NumpyOneInputOpsCorrectnessTest::test_cumprod
-NumpyOneInputOpsCorrectnessTest::test_diag
+NumpyOneInputOpsCorrectnessTest::test_diagflat
 NumpyOneInputOpsCorrectnessTest::test_diagonal
 NumpyOneInputOpsCorrectnessTest::test_diff
 NumpyOneInputOpsCorrectnessTest::test_dot
diff --git a/keras/src/backend/openvino/numpy.py b/keras/src/backend/openvino/numpy.py
index 1caf0ecf830..6b7c4ef205c 100644
--- a/keras/src/backend/openvino/numpy.py
+++ b/keras/src/backend/openvino/numpy.py
@@ -473,7 +473,70 @@ def cumsum(x, axis=None, dtype=None):
 
 
 def diag(x, k=0):
-    raise NotImplementedError("`diag` is not supported with openvino backend")
+    x = get_ov_output(x)
+    x_shape = x.get_partial_shape()
+    rank = x_shape.rank.get_length()
+
+    if rank == 1:
+        N_dim = x_shape[0]
+        if not N_dim.is_static:
+            raise ValueError(
+                "diag requires input with static shape for 1D input."
+            )
+        N = N_dim.get_length()
+        output_size = N + np.abs(k)
+        out_shape = ov_opset.constant(
+            [output_size, output_size], dtype=Type.i32
+        ).output(0)
+        zeros_const = ov_opset.constant(0, x.get_element_type()).output(0)
+        diag_matrix = ov_opset.broadcast(zeros_const, out_shape)
+
+        indices = []
+        if k >= 0:
+            for i in range(N):
+                indices.append([i, i + k])
+        else:
+            for i in range(N):
+                indices.append([i - k, i])
+
+        indices = np.array(indices, dtype=np.int32)
+        indices_const = ov_opset.constant(indices, dtype=Type.i32).output(0)
+        updated = ov_opset.scatter_nd_update(diag_matrix, indices_const, x)
+        return OpenVINOKerasTensor(updated.output(0))
+
+    elif rank == 2:
+        M_dim = x_shape[0]
+        N_dim = x_shape[1]
+        if not M_dim.is_static or not N_dim.is_static:
+            raise ValueError(
+                "diag requires input with static shape for 2D input."
+            )
+        M = M_dim.get_length()
+        N = N_dim.get_length()
+
+        if k >= 0:
+            L = np.minimum(M, N - k) if (N - k) > 0 else 0
+            indices = [[i, i + k] for i in range(L)]
+        else:
+            L = np.minimum(M + k, N) if (M + k) > 0 else 0
+            indices = [[i - k, i] for i in range(L)]
+
+        if L <= 0:
+            keras_dtype = ov_to_keras_type(x.get_element_type())
+            np_dtype = np.dtype(keras_dtype)
+            empty_np = np.empty((0,), dtype=np_dtype)
+            empty_const = ov_opset.constant(
+                empty_np, x.get_element_type()
+            ).output(0)
+            return OpenVINOKerasTensor(empty_const)
+
+        indices = np.array(indices, dtype=np.int32)
+        indices_const = ov_opset.constant(indices, dtype=Type.i32).output(0)
+        diag_vec = ov_opset.gather_nd(x, indices_const)
+        return OpenVINOKerasTensor(diag_vec.output(0))
+
+    else:
+        raise ValueError("diag supports only 1D or 2D tensors")
 
 
 def diagonal(x, offset=0, axis1=0, axis2=1):