Recent numerical and observational studies have demonstrated that tropical cyclones undergo diurnal and semi-diurnal variability in precipitation rate and in its kinematic structure. However, the physical processes and mechanisms that govern the diurnal variability within the tropical cyclone boundary layer has not yet been examined. Numerical experiments using a high-resolution, non-hydrostatic, axisymmetric model are performed to examine the diurnal changes in the kinematic and thermal structure of the tropical cyclone boundary layer. It is shown that the numerical model used in this study reproduces the diurnal variability in the tropical cyclone boundary layer from previous observational studies. Using cross-correlation analysis, it is shown that enhanced radial inflow during the evening drives enhanced convection within the tropical cyclone boundary layer. Using budget analysis of potential temperature, water vapor mixing ratio, and radial inflow, it is shown that the combined effects of cloud evaporative cooling and nocturnal longwave radiative cooling destabilizes the outer regions of the tropical cyclone, and the net effect of this cooling is to initiate an overturning transverse circulation that enhances radial inflow during the evening hours. Conversely, the differential radiation pattern created by clouds in the outer core of the tropical cyclone boundary layer during the evening is reversed during the daytime by shortwave heating, which suppresses the overturning transverse circulation. The analysis suggests the diurnal changes in both lapse rate and cloudy-clear differential radiative heating are vital to the diurnal variation of the outer regions of the tropical cyclone boundary layer.