The France Under-21s international, who has been linked to a whole host of Premier League clubs, arrives at the London Stadium for a club-record fee.
Reports suggest that the Hammers have paid £22m to sign the young French centre-back, who passed a medical on Monday and officially agreed a five-year contract earlier today.
Diop has been a first-team regular for Toulouse since breaking into their side at the age of 18 in November 2015, racking up just short of 100 appearances for the French side.
Speaking to United's official website, Diop said: "I am very happy to sign for such a historic, English club, and I hope to show my best here.
"I am a very ambitious player and West Ham is a very ambitious club, as we've seen with the appointment of the new coach. I hope to help the team win lots of games and make the fans happy."
West Ham director of football Mario Husillos added: "Issa is a player with fantastic potential who has already shown great quality at such a young age.
"It is a measure of his character and maturity that he was named captain of Toulouse at just 20 years of age, having already established himself in their team as a teenager.
"He has represented France at every youth level up to Under-21 and we believe that he is now ready to make the next step in his career by moving to the Premier League with West Ham United.
"There were many other big clubs interested in signing Issa and we are delighted that he has chosen to join us. We look forward to hopefully seeing him make a big impact next season."