The dependences of microwave efficiency and frequency on the parameters of diode in virtual cathode oscillator (VCO) are studied with particle-in-cell simulations, which further gives the effects of diode impedance on microwave efficiency and frequency. The characteristic impedance of microwave mode in virtual cathode oscillator is derived as in other high power microwave generators with slow-wave configurations and is used to analyze the optimization of diode parameters. It is shown that the optimal values of diode parameters are obtained when the diode impedance matches with the characteristic impedance of microwave mode in VCO with coaxial wave guide as well as in VCOs with other configurations. This is a good theoretical explanation for the optimization of diode in VCO and can be used to guide the design of devices.