In historical linguistics, lexical diffusion is both a phenomenon and a theory. The phenomenon is that by which a phoneme is modified in a subset of the lexicon, and spreads gradually to other lexical items. For example, in English, /uː/ has changed to /ʊ/ in good and hood but not in food; some dialects have it in hoof and/or roof but others do not; in flood and blood it happened early enough that the words were affected by the change of /ʊ/ to /ʌ/, which is now no longer productive.
The related theory, proposed by William Wang in 1969, is that all sound changes originate in a single word or a small group of words and then spread to other words with a similar phonological make-up, but may not spread to all words in which they potentially could apply. The theory of lexical diffusion stands in contrast to the Neogrammarian hypothesis that a given sound change applies simultaneously to all words in which its context is found.
Mainstream historical linguists reject Wang's hypothesis, continuing to adhere to Neogrammarian exceptionlessness. For example, Pulleyblank regards the theoretical formulation of lexical diffusion as presented by Hsieh in Wang 1977 as “so manifestly at odds with any realistic picture of how dialects are inter-related and how innovations spread spatially through a language as to make them totally untenable” (1982: 408).
Referring to one of Wang's touchstones of lexical diffusion, Egerod dismisses his theory as a sleight of hand:
there is no “massive split” involved, but an error of methodology in accounting for tones. Cháozhōu like other languages in China or outside of China has a complicated history with migration waves, loans and analogical formation. The conscientious historical linguist has to account for these before he resorts to a deus ex machina” (1981: 173).
Mazaudon & Lowe conclude a robust critique of lexical diffusion in a similar vein, remarking that “a detailed study of the history of the language can disentangle the reflexes from different sources, and it is not necessary to renounce the principle of regular change for the sake of such cases” (1994: 11).