We employ first-principles density functional theory calculations to study the surface reconstruction, energetic stability, and electronic structure of diamond C(331) surface. Spontaneous formation of graphene-like stripes on the reconstructed surface is found to occur as the surface terrace C atoms transform from sp3 to sp2 hybridization upon structural relaxation. The comparison of the calculated absolute surface energies of C(331), C(111), and C(110) surfaces demonstrates the energetic stability of the graphitic-like C(331) surface. Local density of electronic states analysis reveals the occurrence of localized electronic states near the Fermi level, which may have a significant impact on the surface conductivity.