The Stratospheric Aerosol and Gas Experiment (SAGE) III has been operating on the International Space Station (ISS) since mid-2017. Nitrogen dioxide (NO2) number density profiles are routinely retrieved from SAGE III/ISS solar occultation measurements in the middle atmosphere. Although NO2 density varies throughout the day due to photochemistry, the standard SAGE NO2 retrieval algorithm neglects these variations along the instrument's line of sight by assuming that the number density has a constant gradient within a given vertical layer of the atmosphere. This assumption will result in a retrieval bias for a species like NO2 that changes rapidly across the terminator. In this work we account for diurnal variations in retrievals of NO2 from the SAGE III/ISS measurements, and we determine the impact of this algorithm improvement on the resulting NO2 number densities. The first step in applying the diurnal correction is to use publicly available SAGE III/ISS products to convert the retrieved number density profiles to optical depth profiles. The retrieval is then re-performed with a new matrix that applies photochemical scale factors for each point along the line of sight according to the changing solar zenith angle. In general NO2 that is retrieved by accounting for these diurnal variations is more than 10 % lower than the standard algorithm below 30 km. This effect is greatest in winter at high latitudes and generally greater for sunrise occultations than sunset. Comparisons with coincident profiles from the Optical Spectrograph and InfraRed Imager System (OSIRIS) show that NO2 from SAGE III/ISS is generally biased high; however the agreement improves by up to 20 % in the mid-stratosphere when diurnal variations are accounted for in the retrieval. We conclude that diurnal variations along the SAGE III/ISS line of sight are an important term to consider for NO2 analyses at altitudes below 30 km.