The Saints announced the deal on their official Twitter feed.
Lovren makes the hop across the English channel having spent three seasons with Lyon, winning the Coupe de France with last year.
Having started out with Dinamo Zagreb he won the first of his 17 international caps during his four-year spell with them, although he did spend time out on loan with Inter Zapresic.
"I've spoken a lot with the chairman and the coach, and this is a great project," Lovren said on the club's official website after completing his move for an undisclosed fee.
"They told me a lot of positive things, and I know the history of the club. It's a big club and I'm very happy that I can be a part of it."
Lovren, who was courted by a number of other European sides, admitted the lure of the Premier League had proved too strong.
"After three and a half years in France, it was a dream to play in the Premier League. Now the dream has come true," he said.
"I have it in my mind to do something big, and I see the same thing in the club.
"We are a young team, and I am a young player also so I hope I will stay here for a long time."
- Sports & Recreation
- Premier League
- Dinamo Zagreb
- Coupe de France