24-year-old Tete joined Lyon from Ajax in 2017 and has gone on to make 80 appearances.
However, he struggled for continuity in the side, starting only nine Ligue 1 games last season.
OL boss Rudi Garcia prefers Leo Dubois in the role and as a result Tete is now being moved on.
According to Voetbal International, Tete has already passed his Fulham medical and an announcement is imminent.
At Fulham he will compete for the right-back spot with Denis Odoi and Cyrus Christie.
Tete is a 13-time Dutch international and was in their latest squad, but did not feature against Poland and Italy.
Lyon have announced the sale of Tete to Fulham for €3.2m. They will receive 10% of any future transfer fee if it is over €10m.
L'Olympique Lyonnais informe du transfert de Kenny Tete au club anglais de Fulham pour un montant de 3,2 M€ auquel pourra s’ajouter un intéressement sur un futur transfert égal à 10% de tout montant perçu au-delà de 10 M€. https://t.co/WUtVCZiP5W
— Olympique Lyonnais (@OL) September 10, 2020