The 25-year-old, who had just one year remaining on his contract at the London Stadium, has penned a five-year deal with Marco Silva's side, who earned a creditable 2-2 draw against Liverpool in their Premier League opener last Sunday (AEST).
Diop came through the ranks at Toulouse before joining the Hammers in 2018, but only made 13 league appearances last season after falling out of favour under David Moyes.
The defender is the seventh arrival at Craven Cottage during the transfer window, following Fulham's acquisitions of Joao Palhinha, Andreas Pereira, Kevin Mbabu, Bernd Leno, Manor Salomon and Shane Duffy.
Director of football operations Tony Khan told Fulham's website: "Issa is a talented and imposing defender whom we've pursued for a long time, and his experience and formidable presence will be important to our squad in this Premier League season."
Diop could make his Fulham debut when Silva's team face Wolves at Molineux on Saturday.