The Germany international had already agreed to join Spurs when his contract with the Bundesliga club expired in the summer.
But Spurs have brokered a deal believed to be worth around £1.5million to push through the signing before the window closes on Thursday.
A statement on the Spurs website read: "We are delighted to announce that we have reached agreement with Schalke for the immediate transfer of Lewis Holtby.
"The Germany Under-21 captain, who had already agreed terms to join the Club this coming summer, has made 27 appearances for the Bundesliga side this season scoring four times.
"Capped on three occasions by the senior German national side, the versatile midfielder joined Schalke in 2009 from Alemannia Aachen and was loaned out to Bochum and Mainz prior to making his breakthrough with the Gelsenkirchen-based club.
"Lewis has made 160 appearances in his career to date, scoring 29 times."
Holtby, who has signed a four-and-a-half-year contract with Spurs, spoke earlier this month about his desire to play in England.
"Tottenham are a top club and I'm fulfilling my dream," he said.