The full-back has been with PSG since 2015, but has struggled to hold down a regular starting role at the club, never making more than 20 league appearances in a season during his time at the Parc des Princes.
Kurzawa featured just once throughout the entire 2021-22 campaign - in the Trophee des Champions - and he has now secured his exit to spend the 2022-23 season with newly-promoted Fulham.
"I feel very, very happy to be here. It's a family here, everyone is very cool," Kurzawa told the club's official website
"I've watched every Fulham game this season, and I can't wait to play with this team."
Chairman Tony Khan added: "I'm thrilled that we've been able to add Layvin Kurzawa to our squad!
"As we work to build on our good start to this season, adding a player of his talent and his experience against top competition will complement our team well.
"Layvin is excited to be part of Marco [Silva]'s squad and to play for Fulham! Come on Fulham!"
During his time in the French capital, Kurzawa helped PSG to win 17 trophies, including four Ligue 1 titles.
It remains to be seen whether the France international is fit enough to feature immediately for Fulham, but if so then he could make his debut for the club against Tottenham Hotspur on Saturday.
Kurzawa is Fulham's eighth signing of a busy summer, following Joao Palhinha, Andreas Pereira, Manor Solomon, Kevin Mbabu, Bernd Leno, Shane Duffy and Issa Diop through the door at Craven Cottage.
The Cottagers are expected to make further additions before the 11pm transfer deadline too, with Willian and Carlos Vinicius having also been linked with late moves.