British media reported Ipswich paid around 8.5 million pounds for the 29-year-old Morocco international.
Diop arrives after four seasons at Fulham, where he made 96 appearances in all competitions.
He began his senior career at Toulouse before joining West Ham United in 2018, making 121 appearances and scoring eight goals before moving to Fulham in 2022.
Diop has made five appearances for Morocco at the 2026 FIFA World Cup and scored a goal against the Netherlands in the tournament.
"I'm excited to take the next step in my career at Ipswich Town," Diop said in a statement.
"I know how big the club is and have enjoyed all of the conversations I have had before making the move. I know this is the right place for me."