According to reports, Sanchez, who plays for Arsenal, and Diaz, who plies his trade with Hamburg, nearly came to blows in the dressing room after Chile beat El Salvador 1-0 on Friday.
It is understood that Sanchez demanded to take a free kick in the 43rd minute of the match, which led to Diaz, who is the designated set-piece taker, calling the 26-year-old greedy and criticising him for missing a training session. It was at this point that captain Gary Medel and other players were forced to intervene and separate both players.
However, speaking at a press conference on Monday, Sanchez made it clear that everything has returned back to normal and added that he and Diaz have patched up and put the incident behind them.
"We're all good," Sanchez said. "It was an exchange of opinions, like [the media] loves, it's normal. Everything's sorted, there's no fight and we are all calm, they're things that happen in a match."