The 26-year-old has agreed a deal until June 2018 at Borussia Park, and will join up with Lucien Favre's side at the end of his current deal with Hoffenheim.
Johnson is equally adept playing at full-back or in midfield, and sporting director Max Eberl was thrilled to capture the versatile United States international.
"Fabian Johnson is a very interesting free transfer, he can play defensively and offensively on both wings," he told the club's official website.
"We are pleased he has chosen us."
Johnson came through the ranks at German second-tier outfit 1860 Munich, before joining Wolfsburg in July 2009.
He subsequently moved to Hoffenheim in June 2011, but it was announced that he would leave the club earlier in February.
Johnson has 16 caps for the USA, and is hoping to be a part of Jurgen Klinsmann's 23-man squad for the FIFA World Cup in Brazil later this year.
Manchester United eyeing surprise move for AC Milan star for whom tension in Italy is growing: report
‘Even though Kevin Keegan was my boyhood hero, we never really saw eye-to-eye. That was an underwhelming time for me – I felt on the outside’: Newcastle cult hero reveals disappointment over how things went under King Kev
