VfB Stuttgart sporting director Fabian Wohlgemuth confirmed the deal, with the German club paying approximately €18 million to Leicester — on top of the €3.5 million loan fee already paid — bringing the total cost of the operation to just under €22 million.
"All the conditions have now been met," Wohlgemuth said. "We are delighted that we have secured Bilal's permanent commitment to VfB Stuttgart."
El Khannouss, 22, joined Leicester from KRC Genk in August 2024 for around £21 million and made 39 appearances across all competitions for the Foxes, contributing three goals and five assists before the club's relegation from the Premier League at the end of that season. Leicester's relegation to League One means the sale is financially expedient as well as inevitable.
In Stuttgart, El Khannouss found an environment that suited him immediately.
He made 41 competitive appearances across all competitions this season, registering nine goals and seven assists. That return made him one of the Bundesliga club's most influential attacking players and convinced the Stuttgart coaching staff and board that triggering the permanent option was straightforward.
The Morocco international has also established himself at international level, earning 35 caps for his country. He was part of Morocco's Africa Cup of Nations-winning squad earlier this year.
Wohlgemuth was pointed about how much room he believes remains in the player's development.
"Bilal has already exceptional football skills, but at the same time we see further room for development," he said. "We are convinced that he has not yet reached his full potential."
El Khannouss has signed a long-term contract keeping him in Stuttgart until at least 2030. He becomes one of the most financially significant departures from Leicester City at a moment when the club face serious questions about their immediate future in the English football pyramid.