Diame arrived on a free transfer in the summer after seeing out his contract at Wigan.
The Senegal international is believed to have rejected several other offers to move to West Ham and the all-action midfielder has impressed in east London.
The 25-year-old has been instrumental in helping West Ham climb up to sixth spot in the table in their first season back in the Premier League and he feels his decision to join the Hammers has been vindicated.
"People did say 'Why are you going to West Ham when you can play in the Champions League?' but they can see why I did now," he told West Ham TV.
"It is a very big club in England and I am very happy to be here, now I am hoping that our good performances will continue.
"That is why I came here. When I spoke to the club I knew they were trying to build a very good team.
"We are working very hard every day on the training ground and you can see it is paying off."