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A 14th level transmuter wizard has this feature:

Master Transmutation

Starting at 14th level, you can use your action to consume the reserve of transmutation magic stored within your transmuter’s stone in a single burst. When you do so, choose one of the following effects. Your transmuter’s stone is destroyed and can’t be remade until you finish a long rest.

(...)

  • Restore Life. You cast the raise dead spell on a creature you touch with the transmuter’s stone, without expending a spell slot or needing to have the spell in your spellbook.

Raise dead (the cleric/paladin spell) has a costly material component:

A diamond worth 500gp

Does the wizard need the diamond to use his class feature?

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As stated by Jeremy Crawford in this sage advice answer,

Casting a spell requires all its components unless a trait or feature says otherwise.

Since this feature doesn't specify that you don't need to provide components, you will by RAW have to not only provide the diamond, but also be able to provide Verbal and Somatic components to cast Raise Dead.

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    \$\begingroup\$ In addition to sacrificing your Transmuter's Stone. \$\endgroup\$ – Slagmoth Nov 29 '16 at 19:04
  • \$\begingroup\$ Yeah, the Restore Life effect seems to be an outlier in that it involves using the stone to cast a spell - the only thing the stone does for you in this case is that you don't use up a spell slot or need to have the spell in your spellbook. \$\endgroup\$ – V2Blast Mar 9 '18 at 20:44
  • \$\begingroup\$ I'm certain that was intentional. Wizards only get one healing spell (Life Transference) and get zero resurrection abilities. Good for when you don't have a Cleric/Druid handy, but your Paladin isn't high enough level. \$\endgroup\$ – Daniel Zastoupil Sep 20 '18 at 15:42
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Yes, you still have to supply material components

The ability allows you to cast the spell without expending slots or even having the spell in your book. It does not mention the ability to ignore the material costs as well. In 5e, things do only what they say they do.

Jeremy Crawford has confirmed this by stating:

The transmuter's Restore Life requires a material component. It would tell you if it didn't.

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