The 25-year-old transfers from Portuguese outfit Rio Ave, for whom he made 73 league appearances over three seasons.
The younger brother of Black Stars midfielder Mubarak Wakaso, Alhassan becomes the second Ghanaian at Lorient, joining striker Abdul Majeed Waris.
"I have heard a lot about FC Lorient by former Lorient and current Rio Ave defender Pedrinho in particular, and by Majeed Waris, who is a great friend," Wakaso said, as reported by his club's official website.
"They told me good things and I am happy today to arrive at FCL.
"Playing in France was a real goal and being able to do it is a great pleasure.
"With my new teammates, we have a great challenge to keep the club in Ligue 1."
Wakaso, who joined Rio Ave from Portimonense in 2014, made 13 league outings and a goal to his name for Rio Grande this season.
"We went to watch him on several occasions with the recruiting unit," Lorient sporting director Christophe Le Roux said.
"I am convinced that Alhassan will succeed in imposing himself in the plans of the coach.
"He is a player with enormous physical abilities and it was paramount for us to find a player of his profile.
"I hope he adapts quickly because we have objectives to be achieved in a very short time."
Wakaso is uncapped at international level, although he received a call-up for Ghana's 2018 Fifa World Cup qualifier against Egypt last year.
Lorient currently sit bottom of the Ligue 1 table after matchday 19.