The 21-year-old won the trophy with a total of 93 votes, which was 26 more than his nearest rival, Bayern Munich and Ghana's Samuel Osei Kuffour.
Kuffour was disappointed after pre-ceremony comments that he would be a worthy recipient of the ultimate individual accolade for African footballers.
No defender has topped the poll since its introduction 32 years ago, although goalkeepers Thomas 'Black Spider' N'Kono of Cameroon (twice) and Badou Zaki of Morocco were previous winners.
Cameroonian striker Samuel Eto'o Fils placed third with 34 votes.
Diouf received the award from Caf President Issa Hayatou and then dedicated it to his mother who stood beside him on stage, and to the people of Senegal.
A bright future
At 21 Diouf's profile has been boosted by the accolade and his Yugoslav agent Alexander Kristic said that although the player is likely to stay at Lens for another year, a move to the English premiership is the ultimate goal.