  Diffraction phenomena usually can be formulated in terms of a potential that
induces the redistribution of a wave's momentum. Using an atomic Bose-Einstein
condensate coupled to the orbitals of a state-selective optical lattice, we
investigate a hitherto unexplored nonadiabatic regime of diffraction in which
no diffracting potential can be defined, and in which the adiabatic dressed
states are strongly mixed. We show how, in the adiabatic limit, the observed
coupling between internal and external dynamics gives way to standard
Kapitza-Dirac diffraction of atomic matter waves. We demonstrate the utility of
our scheme for atom interferometry and discuss prospects for studies of
dissipative superfluid phenomena.
