Novel view synthesis from a single image requires inferring occluded regions of objects and scenes whilst simultaneously maintaining semantic and physical consistency with the input. Existing approaches condition neural radiance fields (NeRF) on local image features, projecting points to the input image plane, and aggregating 2D features to perform volume rendering. However, under severe occlusion, this projection fails to resolve uncertainty, resulting in blurry renderings that lack details. In this work, we propose NerfDiff, which addresses this issue by distilling the knowledge of a 3D-aware conditional diffusion model (CDM) into NeRF through synthesizing and refining a set of virtual views at test-time. We further propose a novel NeRF-guided distillation algorithm that simultaneously generates 3D consistent virtual views from the CDM samples, and finetunes the NeRF based on the improved virtual views. Our approach significantly outperforms existing NeRF-based and geometry-free approaches on challenging datasets including ShapeNet, ABO, and Clevr3D.