The 24-year-old striker moves to Ashton Gate for a £5.3m fee having scored eight goals in 31 Ligue 1 appearances during his solitary season at Angers.
Diedhiou, who has also scored one goal in six appearances for Senegal, has put pen to paper on a deal which will keep him at Bristol City until 2021.
"I'm happy to be here and I can't to start and meet my teammates. It was an easy decision to join Bristol City because I like this competition (Championship) and I wanted to play here in England," he told the club's official website.
"The challenge is bigger here. Bristol is a big city and a very good one. There are more matches and they come around quickly. I know a lot about Bristol City and I've spoken lots to the manager here. I know what to expect. I'm aggressive, I'm strong. I like to hold the ball up and also to battle other players. I'm very excited about the challenge ahead."
Manager Lee Johnson added: "I'm absolutely delighted. I think he's going to be a huge player for us. He fits the bill for us because he'll complement all of our strikers perfectly. He's powerful, he's quick and I think he's got the potential to get even bigger and stronger physically.
"The beauty is that now is his time to shine. He's a goalscorer in that he gets into good areas and can score different types of goals – volleys, headers and he's got an attitude to shoot, which is what we're after. I think we can work with him and improve him, which is exciting for me because he's a raw talent who can go as far as he wants in football.
"Obviously it's our record signing, which is amazing. Thank you to Steve, the board and everybody involved in making the decisions, particularly how well Mark [Ashton] has done in this process because it's never easy to bring in a player when the competition is so high."
Diedhiou's fee eclipses City's previous transfer record of £3.25m, which was also paid to Angers when they brought Jonathan Kodjia to the club in 2015.