When Rare was making Pro-Am Racing 64, they realized they would have to rebrand it as part of a well-established franchise to see commercial success. Having developed the Donkey Kong Country trilogy for the SNES, rebranding the game with Donkey Kong characters seemed like the obvious choice. But instead of the famous gorilla, they decided to make his sidekick, Diddy Kong, the star—and thus Diddy Kong Racing was born.
Surely making a game themed entirely around Donkey Kong would have shown stronger sales, but according to one of the artists behind the game, Nintendo was actually pleased that Rare chose the little chimp over Donkey Kong himself.
“Nintendo enjoyed the fact that we chose Diddy Kong over Donkey Kong; I think that it was us trying to build on the fact that Diddy was ours, and DK was theirs.” — Lee Musgrave
This makes sense enough, though ironically Rare lost everything they created for the Donkey Kong series when Microsoft bought them out just a few years later.
Source: Nintendo Life