You can substitute any V7 chord with a diminished chord built on it's 3rd. Actually, this works so well that nobody will realize you did it, because the diminished 5th in the diminished chord is precisely what gives the dominant chord it's effect. Half step resolutions are smooth and effective, and resolving from a diminished 5th is really pleasing.

Here is an example. G7 = G,B,D,F
Bdim = B,D,F,Ab

The BDF are obviously common between both chords. Resolving either chord to a C major will yield plesing results. The diminished 7th will sound like a flat 9 to the listener, who is non the wiser that you just substituted the diminished chord. This is not a real change in harmony at all. The b9 also resolves well to the major 7th if the C were a C major 7.

It also is the diminished 5th which allows the practice of "flat 5 substitution", which is a favorite device of mine. I use it in my chamber compositions and even in my symphonic works. IT works basicly like this:

You've got this chord: G,B,D,F = G7, heading to a C Major.
The B-F = diminished 5th. F-Cb is also a diminished 5th. Cb = B. Since it is this tritone that defines the function of the dominant chord, changing a couple other notes in the chord will not drastically alter it's function. So, what chord contains the F-Cb tritine? You guessed it, Db7, the V of Gb. So G7 to C = Db7 to C. And, this Db7 to C is actually a smoother resolution than the original because it is full of nice half step resolutions, especualliy in the bass, say in a Dm7-G7-C (typical iim7-V7-I). Dm7-Db7-C (usually in a progression like this, CMajor7, CMajor6 or even Cminor7 works better than plain old C Major. Try dm7-Db7-C6 and dm7-Db7-Cminor7 and listen to the new meaning the progression takes on when you play with either of these chords.) Notice the chromatic movementin the bass of the progression when flat 5 substitution is employed. chromatic moving line in the bass....sweeet..

Flat Five substitution also works the other way. In other words, Db7 in the key of Gb may be replaced by G7 from the key of C. This is just the reverse of the above scenario. The progression in Gb, borrowing the G7 from C, looks like this: Abm7-G7-Gb. Remembering that we can resolve Am7-G7 to either GbMajor (or one of it's many variants), or GbMinor, suddenly the possibilites expand greatly for the use of a single Dominant 7 chord!

Now that we grasp the concept of tritone interchangeability, it is easy to see how Dominant 7 chords may share the same pivotal role in modulation schemes as Diminished chords do. (discussed next). Since a lot of phrases, actually a great deal many phrases in almost every genre of music, use the Dominant 7 chord (or an altered variant) in phrase cadences, the Flat Five principle offers a very colorful solution to modulation between phrases or even sections of a work. The melody introducing the modulation need not altered drasticly

Diminished chords, strongly related to dominant 7 chords by way of the tritone,are used often to initiate modulation or serve as a dominant in a phrase cadence. This is where the diminished chord gets really fun. B,D,F,Ab = D,F,Ab,Cb = F,Ab,Cb,Ebb = Ab,Cb,Ebb,Gbb. These 4 diminished chords are all the same notes, the name is defined by their function. Moving a chord containing these tones to a C would make it a B dim, but resolving the same set of notes to E makes them Ddim, etc........

There are truely only 3 sets of diminished chords, one of which is discussed above. To find them all, play a diminished chord on the fretboard. Move it up a fret, tha will yield the next set. Move up one more fret, that yields the third set. Go one more fret up, you have the same notes you started with!!! (Though in a different order).

I don't need to say much here to get you thinking, with all these intercangeable diminished chords, the harmonic possibilites are endless!!! So much fun to be had with carefully constructed progressions that take advantage of the multiple personalities of these chords!!!!
Well, u certainly know ur ****. i absolutely hav no idea wat u were talkin bout the whole time lol
when the power of love overcomes the love of power the world will know peace - jimi hendrix
Awesome Lesson, sir. I thought I knew tritone subs, but this added to my knowledge, and explained a few other things as well. Maybe give a few seperate examples of diminished chord subs to practice with?