Last week, the Terriers were linked with a move for the 23-year-old, who has struggled for regular action in Ligue 1 after a summer move from Feyenoord.
However, both Kongolo and his club have accepted the opportunity to gain first-team football in the Premier League until the end of the season.
Head coach David Wagner told the club's official website: "Terence is a top player who we've followed from his time at Feyenoord. His big summer move to Monaco put him out of our reach at the time, but we're delighted we can bring him in on loan now.
"He is a high-quality young centre back and will provide us with a great option for the rest of the Premier League season. With Michael Hefele and Jon Gorenc Stankovic returning from long-term injuries, it was important to have this.
"Terence has qualities that will really suit our style of play. He's athletic and mobile and he plays on the front foot in the way he defends and uses the ball. I'm excited to work with him during the course of the season."
Kongolo could make his debut when Huddersfield face Bolton Wanderers in the FA Cup third round on January 6.