An improved variable geometry diffuser (VGD) mechanism for use with a centrifugal compressor. This VGD mechanism extends substantially completely into the diffuser gap so that the VGD mechanism may be used more fully to control other operational functions. The VGD mechanism may be used to minimize compressor backspin and associated transient loads during compressor shut down by preventing a reverse flow of refrigerant gas through the diffuser gap during compressor shutdown, which is prevented because the diffuser gap is substantially blocked by the full extension of the diffuser ring. During start-up, transient surge and stall also can be effectively eliminated as gas flow through the diffuser gap can be impeded as load and impeller speed increase, thereby alleviating the problems caused by startup loads at low speeds. The VGD mechanism can be used for capacity control as well so as to achieve more effective turndown at low loads.