Penn won the first round on all three judges scorecards before Diaz seized momentum in the second with his unrelenting pace and punishing body shots. Penn appeared to be on wobbly legs for the second half of the round and Diaz went for the finish, but Penn's chin and heart kept him on his feet. Overall in the round, Diaz landed 127 strikes, according to FightMetric.
Though Penn survived the assault, he had little left to combat Diaz's attack. The Stockton, Calif. native was unrelenting in pummeling the Hawaiian, frequently switching stances and landing at a high rate. Though he couldn't finish him, the outcome was obvious even before cage announcer Bruce Buffer read off the judges' scores, which were 29-28, 29-27, 29-28.
By the end, Penn's face was bloodied and battered.
"That's probably the last time you're ever going to see me," Penn said afterward. "I can't keep doing this."
Penn didn't attend the post-fight press conference, with his injuries requiring a trip to the hospital.
Diaz, known for his high-pressure pace, out-landed Penn 257 to 107 over the course of the 15-minute fight, according to FightMetric.
"In the 10 years we've seen BJ perform, we've never seen him busted up like that," UFC president Dana White said. "Even on bottom getting smashed by [Matt] Hughes and Georges St-Pierre. He doesn't cut, he doesn't bleed, he doesn't swell up. It's like he's got leather skin. He got busted up tonight. Nick Diaz is the real deal."
If it is the end for Penn, he leaves as one of the most respected mixed martial artists in history, with a career that spanned a decade and bridged eras from the dark days of the sport to the current boom. He arrived on the scene as "the Prodigy" with a first-round knockout over Joey Gilbert at UFC 31, and became one of only two fighters in UFC history to win championships in multiple divisions, joining Randy Couture.
Penn is held in the highest regard by fighters for his willingness to compete at any weight class, and despite being just 5-foot-9 and around 180 pounds at his natural weight, he fought from lightweight all the way up to heavyweight.
Penn's signature win may be his UFC 46 welterweight championship victory over Matt Hughes, who had been considered an unbeatable champion after five successful title defenses over a two-year span. But after that win, Penn left the UFC in a contract dispute, only returning two years later. By then, the promotion had begun to gain momentum with The Ultimate Fighter's success, and Penn's return soon jump-started the lightweight division when he captured the belt in 2008. He defended it three times before losing to Frankie Edgar in April 2010.
Penn would win only one more time in his career, knocking out old rival Hughes in just 21 seconds last November. In his last five fights, he was 1-3-1, though the draw came against Jon Fitch, who was considered by most to be the No. 2 welterweight in the world, and two of the losses came to current champ Edgar.
Penn said he simply could not put his family through this pain anymore, adding that he had a second child on the way. Of course, given his snap decision and relatively young age, many believe Penn will find his way back to the cage one more time.
Given the beating he took, the UFC will likely give him some time to spend with his family before checking his future status, and whether his mind is truly made up.
"BJ's a warrior, man" White said. "Like I said, what happened to him tonight, it's never happened to him in his entire career. What he's thinking tonight, he might not think eight weeks from now. Who knows? It might be or it might not be. That's up to him."