New version of SWAN model includes the wave diffraction effect which is the main improvement compared with the previous versions. Experimental data collected in the wave basin of the University of Delaware were used to test its performance. Wave heights were compared in the four cases (with different wave energies and directional spreading spectra). The results agreed well with the measurements, especially for the broad directional spectra cases. The effect of wave diffraction was analyzed by switching on/off the corresponding term. By introducing the diffraction term, the distributions of wave height and wave direction were smoothed, especially obvious for the narrow spectrum cases. Compared with the calculations without diffraction, the model with diffraction effect gave better results.