Diamond films were synthesized form CH4/H2/O2 gas mixture by microwave plasma chemical vapor deposition (MWPCVD) in a water-cooled reaction chamber. Influence of O2 concentration on the film growth was studied with laser Raman spectroscopy and scanning electron microscopy (SEM). The results show that very low O2 concentration markedly promotes diamond film deposition but slightly suppresses the amorphous carbon growth. Consequently, the content of amorphous carbon in the diamond films was drastically reduced. In contrast, higher O2 concentration slows down the deposition of diamond more severely than that of amorphous carbon and results in higher content of amorphous carbon in the films. In addition, the existence of O2 favorably affects the growth of diamond films with smaller grain sizes.