The 21-year-old Senegal international would cost Brentford an initial £35m, with a further £5m in achievable add-ons, and has been cleared to undergo a medical after West Ham United accepted the Bees' bid.
Diouf had been Brentford's priority defensive target throughout the window, with talks only regaining momentum in recent days after months of little progress.
His situation at West Ham had grown increasingly awkward. Diouf started the Hammers' Championship opener against Burnley but has since been excluded from the matchday squad for their past two games, a clear sign that a move was being managed toward its conclusion. The transfer would mark an immediate return to the Premier League for Diouf, whose solitary season at West Ham ended in relegation.
The deal also represents a significant profit for West Ham on a player they signed for £19m only a year ago from Slavia Prague, doubling their investment despite parting with him after just twelve months, with a further sell-on clause reportedly protecting the Hammers' interest in any future Brentford sale.
Nottingham Forest had also registered interest in Diouf earlier in the window, but the player's own preference for a move to Brentford ultimately settled the destination once talks resumed.
For Brentford, the move continues a pattern of shrewd recruitment under Keith Andrews, who has already strengthened his squad significantly this summer even while insisting after a 3-0 win over Tottenham that he was content with his existing options at left-back, where Rico Henry and the 20-year-old Jayden Meghoma remain on the books.
West Ham, meanwhile, must now find a replacement of their own, having already seen Mateus Fernandes and Crysencio Summerville depart this summer as sporting director Nils Koppen works to reinvest the funds generated by the club's outgoing business.