The atmospheric boundary layer (ABL) undergoes substantial changes in its structure and dynamics in the course of a day due to the transient nature of forcing factors such as the surface fluxes of heat and momentum. The non-stationary nature of the mean wind and turbulence in the ABL, associated with the diurnal cycle, can in turn affect the structure of wind turbine wakes and their effects on power losses within wind farms. In this research, large-eddy simulation is used to study the evolution of the turbine wakes and their effects on power losses inside an idealised finite-size wind farm in the course of a full diurnal cycle. The simulation results show a strong effect of atmospheric stability on the wind farm wakes and associated power losses. During the day, the positive buoyancy flux and associated turbulence production lead to a relatively high turbulence level in the background ABL flow, which enhances turbulent mixing and wake recovery. In contrast, during the night, the relatively low turbulence intensity of the ambient ABL flow results in a relatively slow rate of entrainment of momentum into the wake and, consequently, a slow wake recovery. As a result, the averaged power deficit in the wind farm is found to increase with increasing thermal stability. In particular, the averaged power deficit increased from 28% under the most convective condition to about 57% under the most stable condition. It is also found that the low-level jet formed before dawn is weakened owing to the energy extraction by the turbines and deflected upward over the farm. In addition, strong vertical wind veer at that time, associated with the Coriolis force and shallow boundary layer, causes important lateral wake stretching effects, which in turn significantly impacts the performance of the waked turbines.