On October 26, ISIS extremists murdered three men in an orchard at Al Rashad village outside the town of Muqdadiya.
After the killings, ISIS waited and ambushed residents who went collect the dead. At least 14 people were killed and more than two dozen were wounded.
In response to the killings, Shiites attacked Nahr Al Imam, a Sunni village, killing residents and burning orchards and houses.
They accused Nahr Al Imam residents of harbouring members of ISIS.
Since then, nearly 350 families from Nahr Al Imam and at least two other villages have abandoned their homes, according to the Ministry of Migration and Displacement.
“Those criminals want to reignite sectarian [warfare] to retaliate and control the land, villages and houses through displacement,” Sunni politician Khamis Al Khanjar told a group of displaced families on Tuesday.
“We must not allow them to do so,” said Mr Al Khanjar, who leads Azim Coalition, one of two Sunni political blocs that together won 49 seats in Iraq's 329 member parliament in last month's national elections.
Azim secured 12 seats while the other main Sunni bloc, Taqaddum, won 37.
Tobacco businessman-turned-politician Mr Al Khanjar regards the events in Diyala as a “plan drawn by well-known officials and criminal militias.”
He did not name the groups involved.
For decades, Sunnis and Shiites lived together peacefully in Diyala province that borders Iran.
But after the 2003 US-led invasion that toppled dictator Saddam Hussein, the province's towns and remote agricultural areas became flashpoints for sectarian violence.
In an effort to contain tensions after the recent attack, the Iraqi government sent security forces linked to the Ministry of Defence to patrol in and around Muqdadiya.
At the same time, the Shiite community has been pressing the government to tackle ISIS sleeper cells and their supporters from the Sunni community, saying the orchards where they hide should be flattened.
Officials said the situation was under control, and no more violence and displacement was taking place.
“The situation has been stable for the past two days as security forces have been deployed heavily in and around the scene,” acting mayor of Muqdadiya Hatam Al Timimi told The National.
But Mr Al Timimi hinted that it will take some time before the families can go back to their neighbourhoods.
“They need time in order to return to their areas,” Mr Al Timimi said. “We need first community-based reconciliation and security checks.”
He confirmed that a number of people were killed in the retaliatory attacks, but would not give details on numbers or government operations.
The attack has spurred calls for armed mobilisation among Shiites.
“The blood of the martyrs will not go in vain,” Sayyied Hazin Al Araji, a representative of Shiite cleric Moqtada Al Sadr, told a gathering of residents at Al Rashad village this week.
“There must be investigation and compensation,” said Mr Al Araji, whose visit was filmed and published on YouTube.
“We also need the residents to man security checkpoints for protection, because if the situation continues like this for the coming six months we will hold funerals for 100 other people,” he said.
“Forming such a military force is very important,” he said, addressing Governor Muthana Al Timimi.
“God willing,” Mr Al Timimi said. “We need your support."
“Of course,” Mr Al Araji replied.
Since 2003, Sunnis have viewed the security forces with suspicion, complaining that their community is not represented fairly within its ranks.
During his meeting, Mr Al Khanjar said that 450 residents of Sunni villages will join in the security forces and Sunni tribal fighters will protect their villages.
It was not clear how such a force would be incorporated into the security forces, which are comprised of an array of police, army, counterterrorism and militia units.