Diomande has shone the Ivory Coast so far at the 2026 FIFA World Cup, but following their knockout stage exit at the hands of Norway, his club future is now back on the agenda.
New Liverpool boss Andoni Iraola had hoped to bring in Diomande as part of his ongoing squad rebuild ahead of the 2026/27 Premier League season, after securing a £34.5M deal to sign Spain international Victor Munoz from Osasuna.
However, after RB Leipzig reportedly rejected Liverpool's opening €100M offer, PSG have swooped in and the French giants look to have won the race to sign him.
That comes as a major setback for Iraola and Liverpool, with the 19-year-old viewed as their primary summer transfer target, but the Reds hierarchy were not prepared to be dragged into a bidding war for a player with limited top level experience.
Iraola has several other options on the table and reports from the Daily Express indicate he could launch a bid for Matias Fernandez-Pardo following a breakout year at Lille.
Fernandez-Pardo - who can play across a three-man attack - has impressed in France and was rewarded with a spot in Belgium's World Cup squad after scoring eight goals last season.
The 21-yar-old is under contract in France until 2029, but with a transfer value of €35M, he's far cheaper than Diomande and could fit Iraola's blueprint for emerging bargain stars better than the Ivorian.