The midfielder left Arsenal after his contract expired at the Emirates Stadium following an injury-hit nine years in north London.
Diaby had been offered a deal by West Brom but has rejected a move to the Hawthorns in favour of joining Marseille.
A statement on the Ligue 1 club's website said: "Olympique de Marseille and Abou Diaby reached an agreement in principle on Tuesday."
The 29-year-old is reported to have signed a pay-as-you-play deal as he bids to resurrect his career, having played just two games in the past two seasons.
Diaby began his career at Auxerre before joining Arsenal in 2006, where he was tipped to become a long-term replacement for Patrick Vieira.
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