The 29-year-old former Manchester United man, who moved to the bet365 Stadium from German side Hanover in 2014, has become a key man in boss Mark Hughes backline after being moved into a right-back role.
And with his current deal set to expire next summer, Diouf was delighted to pen fresh terms until summer 2020 and he is now targeting some success with the Potters.
He told the club's website: "Another top 10 finish this season is the immediate ambition but we should be targeting the next step, an even higher finish, and success in one of the cup competitions.
"There's no reason why we can’t win a cup; it's a long time since Stoke City won a trophy and I’d love to be part of the team that did so again."
He added: "I've been here for three years now and feel really settled, really part of the club. My family are settled as well and that’s really important to me.
"I want to play as a striker but I’m a football player and will play wherever the manager asks me to and try and do my best."
Stoke chief executive Tony Scholes expressed his delight at tying down the versatile Senegal international, who has made 99 league and cup appearances and scored 19 goals for the club.
"We signed Mame as a striker and over the last 12 months he has proved his versatility in a number of positions," he said.
"He's an extremely important member of Mark's squad and we're delighted he has committed his future to us."