Slimani joins Rudi Garcia's side on a free transfer having played just 19 minutes of Premier League football for Leicester City in this campaign.
Back in August 2016, Slimani joined the Foxes from Sporting CP and he made 47 appearances in all competitions.
During his time at the King Power Stadium, the Algeria forward enjoyed loan spells at Newcastle United, Fenerbahce and most recently Monaco where he contributed nine goals and seven assists during the 2019-20 Ligue 1 campaign.
"I am happy and proud to be at a big club like Lyon. I thank the president. When I was little, I have already come to the region, to Givors, to play tournaments with my team. I am a combative person who gives everything on the field,” Slimani said.
“I hope to bring my experience, my fighting spirit. I come to a team which is first in the championship, which plays well and scores goals. I want to help the team achieve its goals. I want to do something good here.
"Lyon is a big club which plays for the first places every year, which plays to participate in the Champions League.”
Lyon lead the Ligue 1 table with 40 points after 19 matches - a point above second-placed PSG. They host Metz for their next league outing on Sunday.