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But now ESPN reporter Ariel Helwani has reported that Diaz will return in May as UFC 262 is hosted at the Toyota Center in Houston, Texas.
Helwani added that a 'twist' in Diaz vs Edwards is that it will be a five-round non-title fight to co-main event -- the first time in UFC's history.
Diaz has since taken to social media to confirm that he will be in the co-headline picture for UFC 262.
UFC doesn't usually hold five-round non-title fights outside of main events on its MMA cards.
Diaz vs Edwards will co-headline UFC 262 alongside Charles Oliveira vs Michael Chandler, which will be held for the vacant UFC lightweight championship.
Khabib Nurmagomedov announced his retirement from MMA after his stunning second-round submission victory over Justin Gaethje at UFC 254 last October.
The 32-year-old Russian superstar wasn't stripped of the lightweight title as UFC president Dana White pushed for him to make a U-turn on his retirement.
UFC chief White insisted that the Oliveira vs Chandler fight "made sense."
The 51-year-old told The Sports Network: "Oliveira just came off an incredible win over Tony Ferguson and looked completely dominant against a guy many people thought should have fought Khabib and was the best matchup for Khabib.
"Then Chandler came in here like a tornado and looked damn good in his last fight, so this fight made sense."
UFC star Tony Ferguson will feature in the other UFC 262 lightweight fight against Beneil Dariush.
UFC 262 will be held on 15th May at the Toyota Center in Houston.
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