The 21-year-old has agreed a long-term contract at the Stadium of Light, becoming the Black Cats' fifth signing of the summer and their most significant outlay of the window as they prepare for a first European campaign since 1973.
Fofana's arrival comes on the same deadline day that saw Sunderland also complete the loan signing of Austria defender Kevin Danso, giving Regis Le Bris fresh options at both ends of the pitch.
Director of Football Florent Ghisolfi said the club had moved decisively to land a player they believe can make an immediate impact.
"Malick has all the attributes to thrive in the Premier League," Ghisolfi said. "He is a player with huge potential and Sunderland AFC will provide him with the right environment to continue to develop and prosper.
"He operates off the left and will complement the versatility of the other wide men we have at the club, who can play across both flanks.
"We are delighted to welcome Malick to the club and look forward to supporting him as he takes the next steps in his career."
Fofana began his career at Belgian club KAA Gent before making the move to Lyon in 2024, where he has scored 19 goals and provided eight assists in 84 appearances across all competitions. He has continued that form into the new season, netting twice in six league games for the Ligue 1 side prior to his departure.
The deal was not without late drama. Crystal Palace made a surprise late intervention on deadline day after Sunderland had already reached an agreement with Lyon, sending the 21-year-old's future into doubt as he weighed up offers from both clubs. Arsenal had also registered interest earlier in the window, but Sunderland ultimately prevailed by improving the terms offered to the player's representatives.
The move continues a busy summer at the Stadium of Light, with Sunderland also having brought in defenders Thomas Meunier and Dayann Methalie and midfielder Jules Ahoka following their seventh-placed finish on their return to the top flight last season. Fofana's arrival gives Le Bris a further attacking outlet after Sunderland beat Fulham on Sunday, having lost their opening match of the campaign at Ipswich.
Between Danso's defensive experience and Fofana's pace and directness out wide, Sunderland's deadline-day recruitment leaves Le Bris with a squad that looks considerably better equipped for the step up in quality that Premier League and European football will demand this season.