The 22-year-old has signed a five-year contract at Craven Cottage, with the fee structured as £26 million up front and a further £4 million in potential add-ons.
That eclipses the previous national record of £15 million, paid by Newcastle United for Jamal Lewis in 2020. Charles began his career at Manchester City before joining Southampton, and also attracted interest from Leeds United before opting for west London. He arrives to replace Sasa Lukic, who completed a £9 million move to Ipswich Town last week.
"I'm buzzing to finally get it over the line," Charles told FFCtv. "The Club has got a really good foundation, from the bottom to the top really.
"It's a great club, with a really good vision — the Manager explained that to me. To be here is a massive privilege.
"I hope to really kickstart my Premier League career. At such a good club as well, it's perfect for me, and hopefully perfect for the fans as well."
Fulham owner Tony Khan welcomed the signing, highlighting Charles's rapid rise through international football.
"I'm thrilled to welcome Shea Charles to Fulham! Shea is an exciting young player, and he's quickly gained important experience both in domestic competitions and at international level as the youngest ever captain of the Northern Ireland team. This is an excellent opportunity for Shea to join Fulham and to continue his development under Álvaro's leadership."
Charles becomes the third most expensive signing in Fulham's history, behind only Gonzalo García and César Palacios, who both joined from Real Madrid for around £34 million as part of manager Álvaro Arbeloa's summer rebuild.
The Northern Ireland international made 31 Championship appearances for Southampton last season and scored the winner in their play-off semi-final victory over Middlesbrough, before the south coast club were expelled from the promotion picture after being found guilty of spying on opposition teams.
Charles has also become one of Michael O'Neill's most trusted players for Northern Ireland, recently taking on captaincy duties and extending his cap tally to 35 during June's friendlies against Guinea and France.
His move continues a strong summer for Northern Ireland's rising talents, following Ethan Galbraith's switch to Stoke City and the arrival of Charles's younger brother, Pierce, at Manchester City, who has since joined Queens Park Rangers on loan.