Local media reported that Lille paid two million euros ($2.57 million) for the 24-year-old Kjaer, who has won 35 caps for his country.
He joined Wolfsburg from Italian side Palermo for 12 million euros ($15.40 million) in 2010.
"It is obvious that joining such a club can only be a good idea," Kjaer said in a statement released by the 2011 French champions, who finished sixth last season.
Kjaer, who spent the 2011-12 season on loan at AS Roma, will replace Cameroon's Aurelien Chedjou, who has signed for Turkish club Galatasaray. ($1 = 0.7792 euros) (Reporting by Gregory Blachier; Editing by Tony Goodson)
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