The former Germany U21 captain only joined Spurs a year ago in a cut-price deal from Schalke, but has struggled to hold down a regular first-team place at White Hart Lane.
When he has played, the 23-year-old has often been played out of his natural position and he is keen to play regular football in a bid to win a place in Germany's World Cup squad.
"Lewis will stay in London and has joined Fulham on loan until the end of the season," said Holtby's agent Marcus Noack, who accused Tottenham of pricing Holtby out of a move back to Germany.
"Fulham has put much effort into Lewis," he added.
"It is a very well-run club with an excellent manager Rene Meulensteen. The system and philosophy how Fulham plays fits well with Lewis.
"He will have match practice in the second half of the season in his favourite position and then we'll see how things are going by summer.
"A return to the Bundesliga has been shattered due to circumstances we couldn't control."
Speaking to Sky Sports N ewsafter training with his new teammates for the first time, Holtby said he is relishing the challenge of helping Fulham try and preserve their Premier League status.
He said: "It's a good opportunity for me and I'd like to thank both clubs especially Spurs for letting this happen and Fulham for letting me play here and show my abilities and giving me some game time.
"I had some really good talks with the gaffer here and everyone at the club made it so easy for me.
"They wanted me so bad and I'll try and give all my abilities to try and keep this club up it's a great challenge.
"I'm happy to be here now and show what I can do. It starts tomorrow against Southampton to try and get three points."
Meanwhile, Tottenham's young full-back Ryan Fredericks has signed a new deal which will keep him at the club until 2016.
The 21-year-old is currently on loan at Millwall - a deal which has been extended to the end of the season - where he has made two appearances, scoring the winning goal in the win over Ipswich.