Tete agreed a four-year contract with the Premier League side, who have an option to extend the deal by a further 12 months.
“I feel blessed to be here. I cannot wait to start my new journey and meet my new team-mates,” Tete told Fulham’s website.
“I heard of Fulham’s interest and I was bowled over. I spoke with people around me and knew quickly I wanted to leave Lyon and join Fulham.
“The team is back in the Premier League now and I will give 100 per cent to keep us there.”
Tete, who has won 13 caps for the Netherlands, began his career at Ajax before joining Lyon in 2017.
The 24-year-old right-back helped Lyon reached the Champions League semi-finals last season and made the last of his 82 appearances for the club against Dijon last week.
“He’s a young player with great experience, and I’m thrilled that he’s joining us on a long contract,” Fulham sporting director Tony Khan said.
“I’m confident that with his talent and his desire to win, he’ll be a great asset for us now and in future seasons.”
Fulham, promoted via the Championship play-offs last season, will feature in the first game of the new Premier League season when Arsenal visit Craven Cottage on Saturday.