A computational study has been conducted to analyze the performance of a centrifugal compressor under various levels of impeller-diffuser interactions. The study has been conducted using a low solidity vaned diffuser (LSVD), a conventional vaned diffuser (VD) and a vaneless diffuser (VLD). The study is carried out using Reynolds-Averaged Navier- Stokes simulations. A commercial software ANSYS CFX is used for this purpose. The extent of diffuser influence on impeller flow is studied by keeping the diffuser vane leading edge at three different radial locations. Detailed flow analysis inside the impeller passage shows that the strength and location of the wake region at the exit of impeller blade is heavily depended upon the tip leakage flow and the pressure equalization flow. Above design flow rate, the diffuser vane affects only the last twenty percent of the impeller flow. However, below design flow rate, keeping vane closer to the impeller can cause an early stall within the impeller. Small negative incidence angle at the diffuser vane is helpful in order to reduce the losses at the impeller exit.