Juventus have the option to make McKennie's move permanent for a fee around £22.7m, while the 22-year-old's switch will automatically become permanent if certain unspecified clauses are met.
The American becomes Juventus’ third signing this summer after Arthur Melo and Felix Correia from Manchester City and the first since the arrival of new head coach Andrea Pirlo who was appointed earlier this month following the dismissal of Maurizio Sarri.
Schalke's head of sport, Jochen Schneider, said: "The agreement we have made with Juventus is the most financially beneficial for Schalke and the most attractive sporting move for Weston.
"Obviously deciding to let go one of our most talented players like Weston is partly down to the financial state the club is in."
Mckennie is a versatile midfielder who can also play in a couple of positions in defence.
The Texas-born star made his professional debut during the dying embers of the 2016/2017 season, as a 77th-minute substitute during a 1–1 draw with FC Ingolstadt.
He went on to star for Die Knappen, making a total of 74 appearances across all competitions since then.
Last season, McKennie made 32 appearances for Schalke, scoring three times.
He also has international experience under his belt, having featured 19 times for the United States and scoring six goals in the process.
