Observations of the diurnal propagating solar tide in the mesosphere and lower thermosphere (~50--150 km) indicate substantial annual variations in tidal amplitudes. Observations and modeling efforts suggest that interactions with internal gravity waves can result in significant modifications of the diurnal tide. Herein a two-dimensional (2-D) linear steady-state tidal model is used in conjunction with hybrid Lindzen/Matsuno gravity wave parameterization to examine the role of gravity wave interactions in the seasonal variability of the diurnal tide in the MLT. The analysis indicates that annual variations of the background atmosphere result in significant annual variations in the eddy diffusion and the diurnal harmonic of the momentum flux divergence (wave stress) produced by breaking gravity waves. The seasonal variability in these two mechanisms can explain the observed semi-annual variability in the diurnal tide: amplitude minima at solstice and maxima at equinox. The relative roles of wave stress and diffusion are examined and it is shown that both play important roles in tidal modification by damping its amplitude. The effects of varying inputs to the gravity wave parameterization are explored. ¿ 1999 American Geophysical Union