The Wales international, who plays for Cardiff Blues, will link up with former England flyhalf Jonny Wilkinson in the Top 14 side's already star-packed squad for next season.
Toulon added that Halfpenny, 25, who can also play on the wing, had agreed a deal that included another optional year.
"We would welcome Leigh here and any club would," Wilkinson was quoted as saying by the Daily Telegraph earlier on Thursday.
"It's about welcoming someone who could add to the team, inspire others and leave a mark. That is what the guy has done with other teams and that is the best thing I can say about anyone."
(Reporting by Julien Pretot; Editing by Patrick Johnston and Justin Palmer)
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