The Senegal international has put pen to paper on a three-year deal which also has a further year's option in the club's favour.
Kamara, who completed the move after passing a medical, has become Albion's fourth signing of the summer after Darren Carter, Steve Watson and Chris Kirkland.
The 24-year-old signed for Portsmouth for £2.25m last summer but the south coast club invoked an escape clause in the contract which meant they recouped £1.5m of their outlay and the player returned to Modena.
He has made six appearances for his country and helped them reach the quarter-finals of the 2004 African Nations Cup.
The Albion manager, Bryan Robson, said: "One of the big reasons we have brought Diomansy on board is because he is very versatile. He can play in three different positions - wide left, wide right or through the middle as a centre-forward.
"He has got loads of pace and, on the occasions I saw him play for Portsmouth last season, I thought he looked a real threat. The sheer pace he has got makes him very dangerous and we're delighted we've snapped him up."
The French-born Kamara scored 11 goals in Serie A during two seasons for Modena after helping them to gain promotion three years ago. Before that, he also had spells with the Italian sides Chievo and Catanzaro between 1999 and 2002.
The West Bromwich midfielder Jason Koumas claims he is close to signing for Cardiff. The Wales international is deemed surplus to requirements at The Hawthorns and has been linked with a switch to the Championship side since the end of last season.
"I'm excited by the move and the fact it's very close to being completed," Koumas said. "I really fancy this move and Cardiff's new manager, Dave Jones, and the club impress me.
"While I can help Cardiff City, I believe they can also help me get my career back on track."
Portsmouth have denied making a new bid to land the Norwich City midfielder Damien Francis after he asked to be pulled out of the Canaries' pre-season friendly at Colchester United.
Pompey have been tracking Francis since Norwich were relegated at the end of last season and the East Anglian club claimed they had turned down two offers for him that did not match their valuation of around £2m. But a club statement said: "Francis has heard about Portsmouth's new expression of interest in him and will not be playing at Layer Road."
Francis's agent, Tony Finnegan, seemed to confirm that there had been a new bid, saying: "Ports-mouth have always been serious about their interest in Damien and hopefully a move is now imminent. There has been a firm offer and Damien had to go in to the manager and say he wasn't focused on the friendly."
However, the Pompey chief executive, Peter Storrie, said: "I have to make it clear that there has been no new bid for Damien Francis from us. All that has happened is that we have asked Norwich, as we do with other clubs, what was the current situation. In other words it is just a polite inquiry. Despite what has been said there is no new bid. Before we buy any more players we have to concentrate on shifting a few the other way."
Storrie's words indicate Pompey may have turned their back on Francis with their manager, Alain Perrin, having already signed six new players this summer which could rise to seven tomorrow when the appeal by the Zambian striker Collins Mbesuma against having a British work-permit application rejected is due to be heard.
Pompey have agreed a fee of around £500,000 for the prolific Kaizer Chiefs striker who scored 35 goals last season to help his team retain their South African league title.Reuse content