In announcing the move on Saturday before their game at Buffalo, the Islanders also recalled goalie Kevin Poulin from Bridgeport. Poulin is expected to take over the role of backup behind starter Evgeni Nabokov. Poulin has a 6-6-1 record in 16 career games with the Islanders the previous two seasons.
DiPietro's demotion is the latest blow to the career of an oft-injured player, who's failed to play up to the 15-year, $67.5 million contract he signed before the 2006-07 season.
This season, DiPietro is 0-3 with a 4.09 goals-against average in three games. There are still eight years at $4.5 million per season remaining on DiPietro's landmark deal.
Islanders general manager Garth Snow said he wants to see DiPietro improve his game down in the minors.
"The decision was made primarily as a first step to get him back to the form he was in before he started getting all these injuries," Snow said. "It's a situation where we want Rick to have every chance to get back to that success."
DiPietro, a former first overall draft pick, was upset when informed of the team's decision, Snow said.
"He was disappointed, like any player would be in that situation," Snow said.
Information from ESPNNewYork.com's Katie Strang and The Associated Press was used in this report.