Roberto Mancini has long been chasing the Croatia international, especially since the sale of Xherdan Shaqiri, but the move appeared to have reached an impasse during the past week.
However, Wolfsburg have since announced that Perisic has sealed a deal to join the Nerazzurri after a breakthrough in negotiations in the last few hours.
"The situation has changed in the last few hours to the extent that we were able to reach a good solution with everyone involved," sporting director Klaus Allofs said to the club's official website.
Perisic, who has made 70 appearances for Wolfsburg since joining from Borussia Dortmund in January 2013, was happy to have the transfer saga resolved.
"I've enjoyed a successful time at Wolfsburg but I'm looking forward to a new challenge. I thank VFL for enabling me to move to Italy and I wish the team continued success," said the 26-year-old.
The news of Perisic's move comes just hours after Kevin De Bruyne's big-money transfer to Manchester City was announced.
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