Speaking to the club's official website, the 19-year-old winger described joining the Blues as a ‘dream move’.
“It feels great to be an Everton player;" said Lookman, who will wear shirt number 31.
“As soon as I heard about Everton’s interest I knew this would be the right place for me.
“Everton has a big history and I was also attracted by the manager.
“When you look at what he did at Southampton, and what he does with young players in terms of developing them, that was a big attraction.
“It was great playing in The Championship last season and for the last six months in League One but I feel like I’m ready to make the step up to the Premier League.”