"I'm very happy to be at Sunderland and I think it's a club that will demand respect, it is moving forward to bigger things."
Diouf, who cost Liverpool £10m in 2002, says he is looking forward to playing for Roy Keane.
"I'm happy to play for a man like him," said the Senegalese play-maker. "I like this type of man, he's a big character and I know he wants to do something big at Sunderland.
"I remember playing against Roy Keane in the [League] Cup final at Cardiff. We had a bit of banter, some words, in the game but I like that, he's a strong character and so am I."