The Senegal forward spent the second half of last season on loan at Rangers but they did not take up the option of signing him permanently.
Diouf incurred the wrath of Kean after returning late for pre-season training and the club have now decided to cut their losses.
"Diouf has left the club. I think we reached a mutual-consent termination of his contract last night," said the Scot.
"He will be moving on to pastures new and we wish him all the best."
Kean, however, was pleased to have kept hold of his key players despite plenty of speculation surrounding Chris Samba and Steven Nzonzi.
And he had more good news for Rovers fans after revealing a "deal in principle" had been reached with Junior Hoilett on a new long-term contract which should be finalised in the next 24 hours.
"There was interest in Steven but we fought it off," added Kean.
"There were no bids that came in for Chris Samba and although there was plenty of speculation that bids would come in they never materialised.
"I gave Chris a couple of days off intentionally to make sure he was out of the country and we are delighted he is still here.
"It is credit to the players and the club that some of the biggest names out there are supposedly interested in our players.
"We now have our group who will take us forward and I am delighted the window has closed and with the business we have done.
"There were some big moves which went though late yesterday but we have managed to keep a real strong group together and when you look at the squad and the permutations we have up front and quality in defence I think we are stronger."
On Hoilett, one of Rovers' outstanding performers towards the end of last season, he added: "We are very close on Junior's deal. We've had extensive talks with him over the last couple of days.
"We have agreed in principle a deal which has not been signed yet as there are a few minor things to sort out.
"We are confident it will be done and dusted in the next 24 hours.
"To see the emergence of him in the last few months...he is an exciting prospect for us to get him tied down for the next four or five years."