The negative differential resistance that has been observed in the current-voltage characteristics of some metal-insulator-metal (MIM) diodes is investigated theoretically. A refined theory, involving the stimulated inelastic tunneling of electrons through the diode\´s insulating layer, is developed to explain the negative resistance. Electrons can tunnel inelastically through the insulating layer by emitting surface plasmons. It is shown that if the diode structure forms a resonant cavity of the proper frequency and sufficiently high

-factor, the effect of emitted plasmons can be contained long enough to stimulate additional inelastic tunneling. Second order perturbation theory is used to derive an equation for the current-voltage characteristic of an MIM diode exhibiting negative differential resistance. Numerical calculations show that a

-factor of

is required to match the theoretical results to published current-voltage characteristics of MIM diodes with negative differential resistance.