SOLUTION (Windows 7 or Vista):

1) You will need (minimum) 16GB USB flash drive (or 16GB SD card). An 8GB flash drive will not work because it will translate to 7.45GB under windows, which is smaller than needed (7.7GB).

2) Copy the entire "MPQs" folder (7.7GB) from:
"C:\Program Files (x86)\Diablo III\Data_D3\PC\MPQs"
to your USB/SD drive. For me, it was "D:\" drive, so the final result was "D:\MPQs". It might be a different drive name for you, so just use what you get.

3) Rename the original "MPQs" ( located on your HDD) to anything you want.

now the tricky part ...ready ?

4) Go to windows start > and type the following in the search box:
cmd
and hit (CTRL+SHIFT+ENTER), which will prompt you to run command line in administrator mode.

5) Once in command prompt, type the following (make sure you have the right letter drive):
cd "C:\Program Files (x86)\Diablo III\Data_D3\PC"
mklink /j "C:\Program Files (x86)\Diablo III\Data_D3\PC\MPQs" "D:\MPQs"

***Note: you cannot "CTRL+V" in command prompt, but you can right click "paste" instead.
***if you don't like this command-line stuff (step 4 and 5) you can jump to windows XP solution, but you have to install an extra program.

If you get a message that says something like: "a symbolic link has been created .." then you did it right. Your done!

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SOLUTION (Windows XP) also works for windows 7/Vista (no command-line involved):

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Basically, we faked the location of the MPQs directory and relocated it to a flash drive with faster read response than your HDD.

Now, you should have read response times (RRT) around 5ms !

ENJOY "stutter-free" Diablo 3 !!!!!!!!!!!!!!!!!!!

dafuq? read usb data is faster than read hdd data? O_O

Yeap, amazing isn't it
BTW, this has been tested by me and a friend personally.
It works and it isn't a hack or exploit.

So safe to use (unless you go deleting stuff by accident, I won't guarantee that )

Is this regarding the problem where diablo 3's fps slows to to a crawl all of a sudden? Ever since the 1.0.3 update, sometimes when I play d3 the fps suddenly slows down to like maybe 10fps and it will remain so even after I restart D3. The only way to fix it is to reboot windows. I installed D3 in my SSD btw.

Which format to use for the pendrive? FAT32 or NTFS?

Either one works bro.
If you are using the thumbdrive for storing the MPQ files only that is.

If you use the USB drive for other reasons, format it to suit ur usage then

might do this on my 64gb usb3 drive

Does this work with a WD Passport?

Does this work with a WD Passport?

Awww looks like I'll have to get a cheap 16 gig USB. Thanks

wow thanks!
will try this out later!
read in forums that some people said playing windowed screen worked for them has anyone tried it yet?