The Wales international had been expected to move overseas after the Cardiff Blues announced this afternoon that he was to leave the region.
Toulon have stated on their official website that the 25-year-old has agreed a two-year contract with the option of a third year available.
"The decision to move to Toulon is the best decision for me and my continued development as a rugby player and as a person," BBC Sport quotes Halfpenny as saying.
"I'm very excited about joining Toulon. They are an outstanding club, very ambitious, full of world-class players and are the current European champions so I'm very proud to have been given the opportunity to be part of that."
Halfpenny, who has won 48 caps for Wales, has spent seven years in the senior team with the Blues.