The 22-year-old centre-back represented Ivory Coast at the World Cup this summer, featuring against Curaçao before the African nation were knocked out by Norway in the Round of 32.
Diomande has penned a four-year deal with the club holding an option for a further year as he prepares to for the start of the Premier League campaign where Forest will first go up against Leeds United.
Speaking on the move, Diomande revealed he cannot wait to get started with Forest who will aim for a European spot under manager Oliver Glasner.
"I am very happy to be here. It is a historic club, and it motivates me to join such a club.
“I believe we can achieve very good things this season and I am looking forward to meeting the players and head coach.
"I will give my best and all I can to help the team. I cannot wait to meet the supporters at the City Ground and together we can have a good season."
Forest had already signed holding midfielder Xaver Schlager from RB Leipzig as well as attacking midfielder Gustavo Sá from FC Famalicão.
Diomande featured 132 times across all competitions at Sporting and joins Geovany Quenda (€50M, Chelsea), Morten Hjulmand (€40M, Atlético Madrid) and Francisco Trincão (€40M Al-Ahli) in the latest player to leave the Portuguese side this summer.