The world number three won 6-1, 6-2 in 73 minutes and will face Argentinian Francisco Cerundolo in the quarter-finals.
"I won and I won decisively, that's pretty good," Zverev said as he kept his bid for a record fourth Munich title alive.
The Bayern Munich fan, who was in attendance at Wednesday's dramatic Champions League quarter-final win over Real Madrid, added: "It wasn't as exciting as yesterday in the Allianz Arena - that was an experience."
Zverev said the clash with fifth seed Cerundolo, who moved past Botic van de Zandschulp 6-3, 6-0 earlier in the day, "would be a more exciting match".
The 28-year-old had struggled past Serb Miomir Kecmanovic in three sets in his opener but had no such difficulties in the Munich sunshine against the world number 37 Diallo.
Diallo seemed to struggle with a back injury and needed treatment on court after the first set.
The victory was Zverev's 100th clay court win this decade, with only world number two Carlos Alcaraz and Dane Casper Ruud boasting more in that time.
Zverev is the only German remaining after compatriot Daniel Altmaier was defeated 6-4, 7-6 (10) earlier on Thursday by Slovak qualifier Alex Molcan.