In order to reduce the flow loss in the volute and improve the efficiency of the centrifugal fan further, a new type volute with a diffusion profile was designed and optimized. The effects of diffusion angles were clarified by using numerical simulations and the method of design of experiment. The mechanism of vortex loss reduction of the diffusion-type volute was revealed. The results show that diffusion-type volute can reduce the flow loss in the volute by 30.8% compared with the original volute, and increase the efficiency of the fan by 2.24%. Parametric studies show that the diffusion angle of front disc has a great influence on the efficiency of the fan, and the effect of diffusion angle of rear disc is relatively less. Mechanism analysis shows that the diffusion-type volute can greatly reduce the vortex strength in the volute, especially eliminate the high-intensity vortex near the volute tongue. As a result, the volute loss is remarkably reduced. In addition, the diffusion-type volute can effectively reduce the amplitude of pressure fluctuation in terms of shaft frequency, characteristic frequency and broadband signals in the volute.