The Polish midfielder has opted to join the Ligue 1 side despite reported interest from the Gunners and several European clubs.
Toulouse manager Alain Casanova confirmed the signing of Furman on Thursday, with the 21 year old penning a four-and-a-half year deal.
"We have followed Dominik Furman for several months, but could not get him last summer due to a large transfer fee," said Casanova.
"He has a great profile, a midfielder capable to play in several different positions. Several German and English sides wanted him. We didn't want to miss him."