The former Reds striker told L'Equipe that the reason he believes Mario Balotelli failed at Anfield is because of the ex-captain's jealousy.
Diouf bizarrely claimed: "I told him not to go to Liverpool. It wasn't made for him, that things couldn't go well with Gerrard, who has never had his talent and then said negative things about him.
"Gerrard is a jealous man who doesn't like men of character. Mario is a good person that you should listen to. He's not a guy who's going to cause problems in the dressing room.
"There are a lot of things that have been made up about him. People tell tales about him, but they're often a load of rubbish."
Diouf, who has previously expressed his dislike of Gerrard, added: "He (Balotelli) was young when he arrived in England, you mustn't forget that.
"When he had problems at City, when he wasn't playing, we talked. I told him that it [his form] would come back.
"Of course it was hard for him, because he's very sensitive. People perhaps don't understand that."