Substituting magnetic ions with nonmagnetic ions is a new way to study dilution. Using determinant quantum Monte Carlo calculations, we investigate an interacting Dirac fermion model with the on-site Coulomb repulsion being randomly zero on a fraction of sites. Based on conductivity, density of states and antiferromagnetic structure factor, our results reveal a novel intermediate insulating phase induced by the competition between dilution and repulsion. With increasing doping level of nonmagnetic ions, this nonmagnetic intermediate phase is found to emerge from the zero-temperature quantum critical point separating a metallic and a Mott insulating phase, whose robustness is proven over a wide range of interactions. Under the premise of strongly correlated materials, we suggest that doping nonmagnetic ions can effectively convert the system back to the paramagnetic metallic phase. This result not only agrees with experiments on the effect of dilution on magnetic order but also provides a possible direction for studies focusing on the metal-insulator transition in honeycomb lattice like materials.

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