The 21-year-old scored eight times in 34 appearances for the Gialloblu last season and that was enough for new Nerazzurri boss Walter Mazzarri to secure his services.
Belfodil told reporters: "Inter are a great team, I'm really happy and I hope to do very well here. Hello all the Nerazzurri fans!"
Inter was hampered by injuries in the striking department last season, with star man Diego Milito suffering a serious knee injury in February which kept him out of action for the rest of the campaign.
His absence coincided with a disastrous end to the season, with the San Siro side finishing in ninth spot in Serie A, and supporters will hope the acquisition of the France Under-20 international will begin a reversal of their fortunes.
Belfodil began his career with Lyon before joining Parma last summer and will add a youthful edge to Inter as Mazzarri looks to rebuild his new club.
The transfer comes just days after Antonio Cassano headed in the opposite direction by leaving the club for Parma after just one season at San Siro.