Diagrammatic rules are developed for simplifying two-loop QED diagrams with
propagators in a constant self-dual background field. This diagrammatic
analysis, using dimensional regularization, is used to explain how the fully
renormalized two-loop Euler-Heisenberg effective Lagrangian for QED in a
self-dual background field is naturally expressed in terms of one-loop
diagrams. The connection between the two-loop and one-loop vacuum diagrams in a
background field parallels a corresponding connection for free vacuum diagrams,
without a background field, which can be derived by simple algebraic
manipulations. It also mirrors similar behavior recently found for two-loop
amplitudes in N=4 SUSY Yang-Mills theory.