The 19 year-old midfielder joins the Terriers until December 6 and is eligible to feature in Saturday’s Championship game at Fulham.
The son of Sunderland manager Gus Poyet, the former England under-17 international joined West Ham this summer from Charlton Athletic, where he played under current Huddersfield boss Chris Powell, earning his professional debut in January 2014 before going on to make 23 appearances over the rest of the season.
Earning the Player of the Year award after his impressive breakthrough, Poyet turned down a new contract with the Addicks in favour of a move to Upton Park, where he has since made three appearances, the latest coming in September's 2-1 defeat at Manchester United.
Now with the chance to aid his development with a run of regular first-team action, Powell was quick to praise the promising Hammer's talents, telling the club's official website: “Diego is a player I know very well from our time together at Charlton. He is a real talent and adds further quality to our midfield options.
“I have been told that Diego caught the eye of a number of clubs, including Huddersfield Town, following his performances for Charlton, but he’s been out of our reach until this opportunity became available.
“He’s made his Premier League bow for West Ham and we will give him further Championship experience. I am grateful that the Club has demonstrated a willingness to enhance the squad and move quickly to get the move done.
“Diego is a tenacious midfield player with a great range of passing; he should dovetail brilliantly with our other midfield players at the Club and fit right into the squad in terms of his personality.”