The Bundesliga champion has announced that it has completed the signing of the experienced midfielder.
The 32-year-old has put pen to paper on a deal which is set to see him reside at the Allianz Arena under former Barcelona boss Pep Guardiola until 2016.
Alonso, who retired from Spain duty on Wednesday following World Cup 2014's group stage exit, had been with the reigning European champion since joining for an undisclosed fee from Liverpool five years ago.
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Madrid had brought on board Toni Kroos from Bayern and James Rodriguez from Monaco as midfield options, prompting Alonso to request a transfer late in the window after losing his starting berth.
He will provide central midfield reinforcements for the Bavarians, who are currently without Javi Martinez, Bastian Schweinsteiger and Thiago Alcantara due to injury.
Former Bayern midfielder Luiz Gustavo, part of the Brazil squad which reached the World Cup semifinals before humiliation at the hands of Germany, is set to leave Wolfsburg to replace Alonso at the Santiago Bernabeu.