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Few-shot instance segmentation extends the few-shot learning paradigm to the instance segmentation task, which tries to segment instance objects from a query image with a few annotated examples of novel categories. Conventional approaches have attempted to address the task via prototype learning, known as point estimation. However, this mechanism depends on prototypes (e.g. mean of K-shot) for prediction, leading to performance instability. To overcome the disadvantage of the point estimation mechanism, we propose a novel approach, dubbed MaskDiff, which models the underlying conditional distribution of a binary mask, which is conditioned on an object region and K-shot information. Inspired by augmentation approaches that perturb data with Gaussian noise for populating low data density regions, we model the mask distribution with a diffusion probabilistic model. We also propose to utilize classifier-free guided mask sampling to integrate category information into the binary mask generation process. Without bells and whistles, our proposed method consistently outperforms state-of-the-art methods on both base and novel classes of the COCO dataset while simultaneously being more stable than existing methods. The source code is available at: https://github.com/minhquanlecs/MaskDiff.