The 21-year-old has penned a four-and-a-half-year contract with the French club.
Toulouse manager Alain Casanova said: "We have followed Dominik Furman for several months, but could not get him last summer due to a large transfer fee.
"He has a great profile, a midfielder capable to play in several different positions. Several German and English sides wanted him. We didn't want to miss him."
Premier League leaders Arsenal had reportedly shown an interest in Furman, who has been capped twice at senior international level.