Quantum phase diffusion in a small underdamped Nb/AlO(x)/Nb junction (∼0.4 μm(2)) is demonstrated in a wide temperature range of 25-140 mK where macroscopic quantum tunneling (MQT) is the dominant escape mechanism. We propose a two-step transition model to describe the switching process in which the escape rate out of the potential well and the transition rate from phase diffusion to the running state are considered. The transition rate extracted from the experimental switching current distribution follows the predicted Arrhenius law in the thermal regime but is greatly enhanced when MQT becomes dominant.