Diao as spurned the offer of a coaching role and working with the academy as from next season.
"We'd love to keep Salif because he is a fantastic lad," said Pulis.
"We'd love to have him involved in the academy. There's a lot of money being spent on that over the next couple of years.
"I want to get certain players involved, those who have been the bedrock of this club over the last six and a half years, and one of those is Sal.
"But he wants to continue playing. He feels as though he is fit enough to do that, which is his decision and I respect it.
"So I'll be very sad to see him go. He was one of the signings that set this club in place, and he's been a credit to himself, his family and the game ever since he has been here."