Abstract: Diagonal Lie algebras are defined as the direct limits of finite-dimensional Lie algebras under diagonal injective homomorphisms. An explicit description of the isomorphism classes of diagonal locally simple Lie algebras was given by Baranov and Zhilinskii. Dimitrov and Penkov described all locally semisimple subalgebras of finitary infinite-dimensional Lie algebras sl(\infty), so(\infty), and sp(\infty), which are important examples of diagonal locally simple Lie algebras. We extend these results further to the class of diagonal locally simple Lie algebras. In particular, all locally simple Lie subalgebras of any diagonal locally simple Lie algebra are described up to isomorphism.