The Nightmare explains the training of his best weapon:

But dig a little deeper and you’ll discover a method to his madness. Sanchez is a devoted follower of Tony Robbins, the motivational guru and self-described "peak performance coach," who has taught Sanchez how to "unleash the power within."
 
"The psychological aspects of mixed martial arts are so huge, if you’re not right in the mind you’re not going to be right in the cage, and the worst thing a fighter can let enter his mind is doubt," Sanchez says.
 
Doubt is the one thing that Sanchez seems not to experience. He simply cannot conceive of losing. In his mind, he is already the UFC lightweight champ, he just has to go into the cage on Saturday and let Penn know that.
 
In Robbins speak, Sanchez operates in the "Peak Mind State," in which the impossible becomes possible, including defeating the overwhelmingly favoured Penn.
 
"It doesn’t matter — lack of sleep, nutrition, training, everything — because there is a power within all of us, a spiritual power," he says. "There is something special in all of us and you can tap into that at any given time." Sanchez calls it "the switch," a mental on/off button that he flips before a fight, unleashing his untapped inner energy. The Chinese call it qi, Obi-Wan Kenobi calls it the force and Tony Robbins calls it the Peak Mind State. Mostly, it’s an inner faith, he says. "I flip the switch and just trust in myself."

Sanchez's particular methods often seem, shall we say, peculiar. But the reality is the mind is a fragile, delicate thing. Your own mind in moments of desperation and challenge will often tend towards flight or acquiescence. Wrestling legend Dan Gable often remarked that fatigue and adversity naturally compelled the mind to quit. The mind was predisposed towards avoidance (generally speaking) when pushed to it's natural limits. The challenge in improving or winning lied solely in denying that impulse and raising what limits the body and mind could accept.

The strange "YES!" mantra or the steady diet of positive feedback over time Sanchez feeds himself has shaped his self-reflection. Over the long run, they allowed him believe that chasing great feats are possible and that he can succeed.

The reality is that one cannot will themselves into places the body or mind simply won't go, but they will allow one to maximize their ability. They turn limits into illusions predicated on weakness. Overcoming the instinct to accommodate challenges is what Sanchez has been mastering for his entire athletic career. Whether his limits lie within the scope of defeating Penn at UFC 107 tonight is impossible to know at this juncture. But we will know when the final bell sounds that Sanchez will have exhausted every mental resource in the pursuit of an athletic dream. Very few fighters - including BJ Penn - will ever be able to boast such a rare accomplishment.

UPDATE: Readers are pointing out there might be some plagiarism issues with the article cited. I'm looking into it and will report back what I find. As for my analysis of Diego and his mind, none of it changes.