When a continent collides with an island arc or other continent, continental crust of the subducted continent may be buried to depths exceeding 100 km, and exposed to pressures that can cause formation of coesite and diamond. This process leads to substantial density increase in SiO2-rich rocks and, in turn, to a reduction of the buoyancy of the subducted material, which should inhibit exhumation. Nevertheless, coesite- and diamond-bearing continental crustal rocks are known from several occurrences worldwide. We report on the discovery of microdiamond in kyanite-garnet gneiss from allochthonous metasediments of the Seve Nappe Complex in the Scandinavian Caledonides. Our discovery calls for general reconsideration of existing exhumation models of deeply subducted continental crust. We propose that the diamond-bearing rocks were subducted in an arc-continent collision setting, and their exhumation was facilitated by local pressure reduction resulting from extraction of the forearc lithospheric block.