The 19-year-old Ivorian is said to be on the brink of joining up with Giovanni van Bronckhorst’s squad having travelled to Scotland to finalise a loan switch from Old Trafford.
According to respected football journalist Fabrizio Romano, Rangers have already reached an agreement with the English Premier League giants for the winger, who will undergo a medical before completing the paperwork on a move until the end of the season.
The deal, which will not include an option to buy, is expected to completed in the next 24 to 48 hours.
Diallo fits the bill of the attacking midfielder Van Bronckhorst is in the market for after Romanian playmaker Ianis Hagi was ruled out for the season due to injury.
United signed the player from Atalanta in a £20m deal last January, but he has made just one first team appearance this season which came in a Champions League group stage fixture against Young Boys in December.
He was close to joining Van Bronckhorst's former side Feyenoord on loan in the summer but the deal fell through.
United are said to be keen for Diallo to gain first team experience in the second half of the campaign with the youngster not part of head coach Ralf Ragnick's first team plans at the moment.
English Championship sides were also keen on taking Diallo on loan but Rangers appear to have won the race.