Diamond is a leading quantum photonics platform due to its ability to host qubits based on crystal defects such as nitrogen-vacancy centres. Fabricating nanophotonic devices from defect-rich diamond, which underpins many quantum sensing technologies, promises enhanced performance and integrability of diamond quantum sensors. Here we demonstrate microdisk cavities fabricated from defect-rich diamond that support optical modes with high quality factor (Q∼7×10⁴ at 1042 nm) and show that they exhibit saturable absorption. Power-dependent spectroscopy measurements spanning 979 nm to 1604 nm are used to observe intensity-dependent cavity loss and extract wavelength-dependent absorption coefficients and saturation intensities. At 1047 nm, we observe saturation and measure a saturation intensity of 2.1 (8) MW/cm² and an absorption coefficient of 0.53 (2) cm⁻¹. These results provide insight into defect-mediated optical loss in diamond nanophotonics and suggest strategies to harness defect-induced nonlinearities in future diamond photonic devices.