Bournemouth manager Eddie Howe has vowed to give his promotion heroes the chance to shine in the Premier League.
Wolves boss Kenny Jackett fears he will lose key winger Bakary Sako after his side missed out on a place in the play-offs.
The 22-year-old has also played for Bastia in the 2011/12 season, when he scored eight times in 30 games, and he appeared 34 times for Rennes last term.
"I am very happy to be here today at FC Lorient. I want to bounce back here with (manager) Christian Gourcuff," Diallo told www.fclweb.fr.
"I chose Lorient since it is a very good club that plays very good football and that suits me.
"I hope to repeat a season like I did at Bastia. I'm here to play and grow."
Lorient manager Christian Gourcuff added: "We are convinced that this is a great player and I hope he will find a favourable environment here to flourish, and bring us all his technical qualities."