Diallo has enjoyed an excellent debut season in the Bundesliga with his performances from centre back. However, while Arsenal are reportedly interested in the player, it's Dortmund who lead the way in the fight to sign him.
According to Italian journalist Gianluca Di Marzio, both clubs are keen on the Mainz defender but the future of Dortmund defender Sokratis Papastathopoulos could have an effect on where Diallo ends up.
Arsenal and Manchester United are both reportedly interested in the Greek centre back, and should Arsenal land Sokratis their focus may shift elsewhere, leaving Dortmund in the best position to sign the Frenchman.
It's understood that Sokratis is unlikely to sign a contract extension with the German club, who want to sell while they can still recoup a decent fee before his contract runs out next summer.
Arsenal and Dortmund are both looking to rebuild under new managers, with defence a priority for new bosses Unai Emery and Lucien Favre. At 22, Diallo's youth and potential could be crucial for either club as they look to revitalise creaking backlines.