Nanoparticle formation during exhaust sampling and dilution has been examined using a two-stage micro-dilution system to sample the exhaust from a modern, medium-duty diesel engine. Growth rates of nanoparticles at different exhaust dilution ratios and temperatures have been determined by monitoring the evolution of particle size distributions in the first stage of the dilution system. Two methods, graphical and analytical, are described to determine particle growth rate. Extrapolation of size distribution down to 1 nm in diameter has been demonstrated using the graphical method. The average growth rate of nanoparticles is calculated using the analytical method. The growth rate ranges from 6 nm/sec to 24 nm/sec, except at a dilution ratio of 40 and primary dilution temperature of 48 °C where the growth rate drops to 2 nm /sec. This condition seems to represent a threshold for growth. Observed nucleation and growth patterns are consistent with predictions of a simple physical model. It assumes that nanoparticles form initially by nucleation of sulfuric acid-water droplets. This is followed by growth by absorption of additional acid and water as well as hydrocarbons into the growing droplets. The model indicates that there is not enough sulfuric acid vapor in the exhaust to explain observed growth. Hydrocarbons absorbing into the concentrated acid solution must also play a role. However, sulfuric acid is the trigger for initial particle formation. Growth is influenced by particle surface area. Existing particles, especially soot agglomerates may strongly suppress growth. Thus, as carbon emissions from engines are reduced, nanoparticle formation and growth becomes more likely unless emissions of sulfuric acid and hydrocarbons are correspondingly reduced.