Areola spent the 2019/2020 season on loan at Real Madrid as deputy to Thibaut Courtois after Keylor Navas secured a transfer in the opposite direction to become the French champions’ number one between the sticks.
Areola played four times in La Liga as Zinedine Zidane’s men won the Spanish La Liga and he also earned a winners’ medal as Los Blancos won the Supercopa de Espana in January. In total, Areola made nine appearances in all competitions for Real Madrid.
Fulham have the option to make Areola’s move permanent at the end of his loan deal.
"I am very happy everything is done," the 27-year-old, who was a member of France’s 2018 FIFA World Cup winning squad, told FFCtv.
"Scott Parker called me and I had a good feeling. He said he really wanted me.
"Fulham is a historic club in London and I have heard a lot about the stadium.
"I hope this season will be a good one for us. I want to bring my energy and do everything for this team to keep us where we belong to be."
Fulham vice-chairman and director of football operations, Tony Khan added: "I'm thrilled to welcome Alphonse Areola to our Fulham family! Alphonse has experience at the very highest level, as he's played in France's national team, won the league title with PSG, had success at RC Lens, Bastia and with Villarreal, and most recently he played for Real Madrid as they won La Liga last season.
"We're excited that he's joining us, and he'll be an excellent addition to our squad as for our Premier League campaign ahead! Come on Fulham!"
Areola could make his debut for Fulham against Arsenal this weekend.