The 23-year-old has agreed to leave White Hart Lane for the Premier League strugglers, where he will hope to reignite a career which has faltered since leaving Schalke
The Germany international completed a medical on Thursday before having a decisive talk with Cottagers boss Rene Meulensteen that sealed the deal on his departure from White Hart Lane.
Fulham, which will give the central midfielder the No. 10 shirt, has been locked in talks with both the player and Tottenham since the start of the week, with all three parties having agreed in principle to a short-term contract that will be signed on the eve of deadline day.
Despite Spurs' willingness to allow Holtby to leave on loan, the Champions League-chasing club will not allow Fulham any option to buy the 23-year-old outright in the summer.
Holtby has endured a frustrating 12-month spell at White Hart Lane since joining Tottenham from Schalke last January, having failed to make his mark on the first team, with the likes of Paulinho, Sandro and Mousa Dembele all ahead of him in the pecking order.
The German had been linked with a return to the Bundesliga, but Fulham's loan move ensures he will remain in England until at least the summer.