For decades, procedural worlds have been built on procedural noise functions such as Perlin noise, which are fast and infinite, yet fundamentally limited in realism and large-scale coherence. We introduce Terrain Diffusion, a generative framework that bridges the fidelity of diffusion models with the properties that made procedural noise indispensable: seamless infinite extent, seed-consistency, and constant-time random access. At its core is InfiniteDiffusion, a novel algorithm for infinite generation that reformulates standard diffusion sampling for unbounded domains. While noise functions remain near-instant, our framework outpaces orbital velocity by 9 times on a consumer GPU, enabling realistic terrain generation at interactive rates. We integrate a hierarchical stack of diffusion models to couple planetary context with local detail, a compact Laplacian encoding to stabilize outputs across Earth-scale dynamic ranges, and an open-source infinite-tensor framework for constant-memory manipulation of unbounded tensors. Together, these components position diffusion models as a practical, scalable foundation for the next generation of infinite virtual worlds.