Lyon said Madrid agreed to pay €48 million plus a potential €5 million in add-ons for the left-back.
The 24-year-old joins Eder Militao, Luka Jovic, and Eden Hazard as Madrid's offseason recruits. Los Blancos reportedly spent more than €250 million on those four players alone and another €45 million on Brazilian prodigy Rodrygo, who agreed to move to Madrid in July after striking a deal in June 2018.
Mendy, who made more than 50 league appearances for Lyon, is considered the heir to Marcelo, the marauding full-back who's dominated Madrid's left flank for the past 12 seasons. Marcelo, 31, struggled to hold his place in the starting lineup during the 2018-19 campaign, only gaining relevance when Zinedine Zidane returned to the bench in March.
Madrid decided to refresh their squad after a disappointing season that ended a run of three consecutive Champions League titles.
"Real Madrid C.F. and Olympique Lyonnais have agreed the transfer of Ferland Mendy," the 13-time European winners said in a statement. "The player has signed a contract with the club for the next six seasons, running to the 30th of June 2025.
"Mendy will be presented on Wednesday the 19th of June at 1:00 p.m. CEST in the VIP box at the Santiago Bernabeu."
Mendy reportedly completed the first part of his medical at Clairefontaine, France's training base, last week before undergoing further examinations in the Spanish capital.
He made his third and fourth appearances for the French national team in recent qualifiers against Andorra and Turkey.