The density matrix renormalization group method is applied to the Pariser-Parr-Pople-Peierls model to calculate the energies and associated structures of the low-lying states of polydiacetylene. The extrinsic dimerization of polydiacetylene, arising from the electrons in p y orbitals in the triple bonds, is explicitly calculated. We find the following results. ͑i͒ Electronic interactions result in a twofold increase in the ground state dimerization, and a twofold decrease in the electronic correlation length, . ͑ii͒ The vertical energy of the 2 1 A g ϩ state lies circa. 1 eV above the 1 1 B u Ϫ state in long chains. ͑iii͒ The 1 3 B u ϩ and 2 1 A g ϩ states undergo a sizable electron-lattice relaxation, while this is modest for the 1 1 B u Ϫ state. As a consequence, the relaxed energy of the 2 1 A g ϩ lies circa 0.1 eV below the relaxed energy of the 1 1 B u Ϫ state. ͑iv͒ The reduction in results in a reversal in bond dimerizations in both the 1 3 B u ϩ and 2 1 A g ϩ states ͑in contrast to the noninteracting Peierls model͒. However, the excitonic 1 1 B u Ϫ state shows a polaronic distortion. We compare our results to experiment. For short oligomers the comparisons are very reasonable, but they are less satisfactory for long chains. The inclusion of solvation effects and a reparametrization of the Ohno interaction may both be necessary.