The 21-year-old defender moved from Dutch side Ajax Amsterdam where he made five appearances last season.
Tete, born to a Ghanaian father and a Dutch mother, has six caps for the Dutch national team:
"I didn't have a great year last season at Ajax, because of the manager's choices, but I always remained positive and that's a good attitude to take to Lyon,'' the right-back said.
"Lyon is a great club with a history. It's important for me to link up again with Bertrand Traore, who played down the right with me at Ajax.
"The little I played was enough to convince Lyon to sign me."
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