The newly promoted Bundesliga side face competition from Everton, Ipswich Town and Marseille for the Senegal international, who is available without a fee having left Monaco after five seasons and 143 appearances.
Diatta joined the principality club from Club Brugge for around €16.7m in January 2021, scoring eight goals and providing nine assists in that time, though a serious knee injury and a shift to right wing-back limited his impact in his final campaign.
The 27-year-old, who has 19 Champions League appearances and 64 caps for Senegal to his name, also featured for his country at this year's World Cup in the United States, Canada and Mexico.
At Schalke he would be considered both for the right flank – also a target position for Junior Dina Ebimbe, whose move to Gelsenkirchen has already been agreed – and the right-side attacking role in Miron Muslic's 3-4-3 system. Schalke's squad already carries considerable European experience for a promoted side, with the likes of Loris Karius, Robin Gosens and Edin Dzeko all on the books, and interest in Diatta would add further pedigree to a group aiming to establish itself back in the top flight.
Diatta's route into the game took him from Senegalese side Santhiaba Zinguinchor and the Oslo Football Academy in Dakar to Norway's Sarpsborg 08, before a breakthrough at Club Brugge saw his market value climb as high as €21m at his peak.
Marseille are understood to have made contact with his representatives before the summer break, though the club must first trim their own squad before pursuing a deal, leaving the door open for Schalke and their rivals to press ahead in the meantime.
With his versatility across both flanks and at full-back, Diatta represents low-risk business for any of the four clubs given the absence of a transfer fee, though his preference is reportedly to take his time before committing to a decision on his next destination.