Fulham will pay an initial £3 million, with a further £1m due to Arsenal based on Premier League appearances. Arsenal will receive an additional £2m if Fulham maintain their Premier League status this season and another £2m if they do the same the following campaign, meaning the total package could be worth up to £8m.
- ESPN+ viewers' guide: LaLiga, Bundesliga, MLS, FA Cup, more
- Don't have ESPN? Get instant access
It feels amazing to finally be here. I can't wait to join the team, to train and play with the team," Leno, who has signed a three-year contract with a club option for a further 12 months, told FFCtv.
"I'm relieved that everything is done. I'm just happy to be here. It took a little bit of time but in the end we made it, and that's the most important thing."
Leno lost the starting job at Arsenal following the arrival of Aaron Ramsdale last summer. The German's role was set to be further reduced after Arsenal signed United States international goalkeeper Matt Turner from the New England Revolution.
Leno arrived at Arsenal in 2018 from Bayer Leverkusen in a deal worth £22m. After being first-choice between the posts in his first three seasons, the 30-year-old made just four Premier League appearances last campaign.
"Bernd Leno is the goalkeeper whom we have pursued steadfastly throughout this transfer window, and we're very excited that we've reached a transfer agreement and he's now fully committed to Fulham!" Fulham's vice-chairman and director of football operations Tony Kahn said.
"He has played at the highest level, and he'll bring this experience and his leadership to our team. He'll be a great addition to Marco's squad, who are all excited for the season ahead!"