This study elucidates the structure and property evolution of microcrystalline diamond (MCD) films radiated by 3.25-MeV Xe15+ ions with an ion fluence of 4.24 × 1014 to 4.24 × 1015 ions/cm2. The results reveal that, compared with nanocrystalline diamond (NCD) films with remarkable irradiation-enhanced lubrication properties, it is difficult to obtain a synergy of the mechanical strength, radiation resistance, and self-lubrication properties of MCD films under irradiation conditions. Various characterizations, including AFM, SEM, visible Raman, XPS, and HRTEM, suggest that radiated MCD films first underwent disintegration of MCD grains into ultra-nanocrystalline diamond (UNCD) grains in the range of 0–1.0 dpa, and then the UNCD grains were transformed into a sp2-riched amorphous structure in the range of 1.0–2.0 dpa. 2.0 dpa is a threshold damage, from which the film structures, as well as the film mechanical and tribological properties, stepped into a quasi-saturation state. This tendency was identical to that of the NCD films; however, it resulted in poor lubrication properties compared to the radiated NCD films. The radiation-induced sp3-to-sp2 transformation resulted in significant degradation of the film mechanical strength, and the well-faceted morphology made it difficult to form lubricious transfer films on the sliding interfaces.