There is a picture environment in LaTeX that can be used. Here's some code I already had in a document, but it contains all the picture commands you would need to draw your diagram.
Originally Posted by ThePerfectHacker
PS: The use of qbezier to draw lines is a trick I learned from a web site. It is much easier and more flexible to draw lines like that then using the standard method from the picture environment.
PS 2: Don't try making making very complicated pictures because there is a limit on the length of the code the LaTeX engine will allow. That limit is set by the administrators (and I think I asked MathGuru to increase it once.)