The mixed spin-(1,1/2) Ising-Heisenberg model on a distorted diamond chain with the spin-1 nodal atoms and the spin-1/2 interstitial atoms is exactly solved by the transfer-matrix method. An influence of the geometric spin frustration and the parallelogram distortion on the ground state, magnetization, susceptibility and specific heat of the mixed-spin Ising-Heisenberg distorted diamond chain are investigated in detail. It is demonstrated that the zero-temperature magnetization curve may involve intermediate plateaus just at zero and one-half of the saturation magnetization. The temperature dependence of the specific heat may have up to three distinct peaks at zero magnetic field and up to four distinct peaks at a non-zero magnetic field. The origin of multipeak thermal behavior of the specific heat is comprehensively studied.