The son of a Cantor and organist,Otto Dienel (1839-1905) took organ lessons from his father.
He attended the Berlin Academy of the arts and the Royal Institute for church music, where he studied organ, violin, singing, choral conducting and composition with August Wilhelm Bach, Eduard Grell and Wilhelm Taubert.
In 1865 he was appointed organist at the Church of St. St. Bartholomew in Berlin-Friedrichshain and later of the Church of the Holy Cross Church in Berlin-Kreuzberg. He was honored with the silver medal of the Royal Academy of Arts in 1869, and succeeded his teacher, Bach as organist at St. Mary's Church in Berlin the same year.
He remained here until his death, and was appointed Music Director there in 1881.
At St. Mary's he introduced the regular free organ concerts, that were so heavily attended that the church often had be closed due to overcrowding! Among his many pupils was Thomas Cantor, Karl Straube was one of his pupils.
He was regarded as a proven expert in the music of Johann Sebastian Bach and outstanding improviser on the organ.