The Ligue 1 outfit confirmed the news on their official website on Thursday, with Pesic becoming the club's first signing of the close-season.
Toulouse finished ninth in the French top flight last season, but their points tally left them closer to the bottom three than European qualification.
The 22-year-old Pesic arrives in France with a strong record, having scored 13 goals in 22 Serbian Super Liga appearances for Jagodina last term.
Those strikes helped his old club finish third at the end of the 2013-14 campaign, which saw them qualify for next season's UEFA Europa League.
Pesic joined Jagodina after a stint in Moldova with Sheriff, and has also made six appearances for Serbia's Under-21 side.
‘So many times when we played Manchester United, arguments would start before the first whistle had even blown – the players would try to kill each other with their eyes’ Former Arsenal star remembers famous Premier League rivalry
Bizarre Jose Mourinho statement aims to pre-empt punishment after Fenerbahce boss clashes with Galatasaray counterpart
