Diango is a merchant who was released as a part of an April Fools' joke. Players had been requesting horses in the game for some time, and were excited to find out that Diango was to be added to sell "horses" in his store (Diango's Toy Store) in Draynor Village. However, Diango actually sells toy horseys, which are not rideable and are mostly useless. He has, however, since gained more functions, the most prominent one being able to return lost or destroyed holiday rewards and selling or giving special commemorative items.
Diango's main use is to be an unlimited store of certain items, thus freeing up bank slots. He allows the retrieval of all holiday items, plus many Treasure Hunter and Squeal of Fortune items. It is possible but not necessary to give him items to store - simply destroying a qualifying item will mean it can be reclaimed at will from Diango. These items will indicate they can be retrieved when you attempt destruction, unless they have a drop option instead. Note however if the item has combat stats, he will charge a fee for its reclaim.
Diango shares the store and reclaim of items with a Toy Box in a POH. Items can be deposited in one, and reclaimed from the other. However, the Toy Box is more limited in that it only stores holiday items.
4 April2005: Jagex had announced the release of "dragon plates". What was actually released were spinning plates with a picture of a dragon on them. A conversation with Diango revealed that they were supposed to arrive on the first of April, but thieves stole them because they mistook them for Dragon platebodies.
1 April2008: Similar to the spinning plate joke, Diango started to sell Dragon Kites; not the dragon kiteshields players had long been hoping for, but a red kite with a picture of a dragon that players may fly, called Toy kites. After buying one for 100gp, players can wield the kite and have it float alongside them or choose the Fly option and fly the kite for a moment in a strong breeze.
A hidden update on 16 December2008 allowed players to right-click on him to claim holiday items.
Around 20 January 2013 (?): The right-click "Holiday items-Diango" got changed to "Retrieve-Diango". The Holiday item retrieval screen also changed, with the left-half of the interface being holiday items, and the right-half of the interface being promotional items.