Injuries limited Chadli to just six total appearances last season, as the Baggies were relegated to the Championship.
Despite his abbreviated campaign the 29-year-old helped Belgium to a third-place finish at the World Cup this summer, scoring in the last 16 against Japan and starting in both the quarter-final and the semi-final.
"I am very happy to join AS Monaco, a great French club that participates in the Champions League," Chadli told Monaco's official website.
"The results of the last seasons prove the quality of the project and the ambition of the club.
"I will do everything to help AS Monaco achieve great things and achieve its goals."
Chadli joined West Brom from Tottenham in 2016, and scored six goals in 36 total league appearances.