We investigate the unitarity of quantum evolution with respect to an internal time defined by a local observer’s clock. The observer is modeled as a relativistic particle carrying both a clock and a matter-field detector, analyzed first on a fixed curved background and subsequently within a fully diffeomorphism-invariant theory of dynamical gravity. In the former case, we find that evolution relative to the internal clock is generally nonunitary, implying a violation of the Einstein equivalence principle at the quantum level. In contrast, in the latter case, diffeomorphism invariance allows us to adopt observer-centric coordinates. On the resulting partially-reduced phase space, one of the diffeomorphism generators becomes linear in the clock Hamiltonian, generating a relational evolution that is consistent with the remaining diffeomorphism constraints. Assuming the existence of an effective quantum theory that consistently preserves diffeomorphism invariance, these features imply unitary evolution relative to the internal clock, thereby preserving the equivalence principle even in the quantum regime. Our results highlight the fundamental role of diffeomorphism invariance in shaping relational unitary evolution from the perspective of a local observer.