The 19-year-old Brazilian spent last season with Real Madrid and has already joined up with the Ligue 1 newcomers on their pre-season training camp in Seefeld.
A statement on the club's official website read: "AS Monaco FC is pleased to announce the arrival in the professional team of Fabio Henrique Tavares, also known as Fabinho, a Brazilian right-back of 19 years who has had spells with Fluminense and Real Madrid.
"Fabinho is loaned for one season by the Portuguese club Rio Ave."
Fabinho was a youth player with Fluminense in his homeland before joining Rio Ave in 2011.
He spent the last campaign on loan at the Bernabeu, making 30 appearances for Real's 'B' team and a single appearance with the senior squad.
Fabinho becomes the latest new face to join the big-spending principality club, along with the likes of Radamel Falcao, Joao Moutinho and James Rodriguez.