The defender was long coveted by the Cottagers as well as Lyon in his native France, but it is with Fulham that West Ham have seen eye-to-eye in the transfer market.
Fulham are on the hunt for another experienced centre-back after loaning Shane Duffy from Brighton, following the departures of Alfie Mawson and Michael Hector.
The 25-year-old is set to move from one London club to another for a sum of £17m and will sign a five-year contract with the Cottagers, according to French outlet Foot Mercato.
Diop made 26 appearances in all competitions for the Hammers during the 2021/22 season, scoring one goal and laying on two assists while earning only two cautions.
West Ham lost their opening Premier League fixture 2-0 at home to defending champions Manchester City courtesy of an Erling Haaland brace, a game in which Diop did not feature.
Fulham held Liverpool to a 2-2 draw at Craven Cottage in which the Reds had fallen behind twice to a goal from Aleksandar Mitrovic in either half.
The Hammers will next face Nottingham Forest away while the Cottagers will travel to Wolves, both looking for their first win of the new campaign.
