The versatile midfielder who can play both as defensive and attacking midfielder across the midfield penned a five-year deal that will keep him at the Bundesliga club until 2022.
Tolisso who came through the ranks at Lyon since age 13, has been phenomenal for the Les Gones side and helped the club to finish in 4th position last season.
The midfielder scored 14 goals and provided seven assists to help Lyon qualify for the next season's Champions League.
He was also impressive in their run in the UEFA Europa League where he scored twice and provided one assist in eight games.
The 22-year-old passed a medical at Bayern's Sabenerstrasse HQ in Munich on Wednesday and thanked his previous club while talking to Bavarian's official website.
"I had a wonderful time at Lyon, and I'm very thankful for that. Now I'm really pleased to be at one of the best clubs in Europe. I have great aims for my time at FC Bayern. Today is a great day for me," he told Bayern's official website.
Bayern CEO Rummenige also wished the midfielder best of luck and revealed it was Bayern boss Carlo Ancelotti's wish to have the versatile midfielder.
Karl-Heinz Rummenigge said: "We're really pleased we've been able to sign such a young and interesting player ahead of stiff competition from abroad. Corentin Tolisso was Carlo Ancelotti's wish for our midfield."
Tolisso becomes Bayern’s fifth recruit of the off-season after Sunday’s signing of former Arsenal winger Serge Gnabry from Werder Bremen for a reported €8m, and the earlier agreed additions of defenders Sebastian Rudy and Niklas Suele from Hoffenheim as well as Kingsley Coman's move from Juventus which was made permanent.
The midfielder will now soon see himself fighting along with likes of Arturo Vidal, Thiago, Renato Sanches and Joshua Kimmich for a starting berth under Ancelotti next season.