Stable Diffusion is an open-source image generation model developed by Stability AI, which can be deployed on Baseten using the Truss package. To deploy Stable Diffusion on Baseten, a Baseten API key must be created and installed PyPi's Truss, then the model weights are packaged for production using Truss. The Truss CLI is used to push the model to Baseten and serve it from the command line with the `truss predict` command. After deployment, a helper script can be written to save and display the output as a nice image file.