The 19-year-old, capped three times by Ivory Coast, joined United in January last year from Serie A club Atalanta, where he made his professional debut.
"It is fantastic for me at this stage of my career to have the opportunity to come to such a big club that is challenging on a number of fronts," Diallo said. Diallo has made a total of nine first-team appearances at Manchester United, registering one goal and one assist, but has played for the English club just once this season.
Rangers went unbeaten to win the Scottish title last season, ending Celtic's nine-year domination. They lead the table this season with 55 points after 22 games and travel to Ross County on Saturday.
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