Wolfsburg have beaten off competition from various European heavyweights to capture Simon Kjaer from Palermo on a four-year deal.
The Denmark centre-back is regarded as one of the brightest defensive prospects in the game and had attracted widespread interest.
Manchester United, Manchester City and Tottenham were all reportedly keen to bring the 21-year-old to the Premier League, while Juventus were also linked with a move that would have kept him in Italy.
But Wolfsburg have now won the chase for Kjaer, recruiting him for an undisclosed fee believed to be in excess of £10million.
The youngster is thrilled to have joined a club seemingly on the up following the appointment of Steve McClaren as boss and the signing of Germany international Arne Friedrich last week.
"The transfer means I have the chance to play for a top club," said Kjaer.
"I think this is the right step for me. We have a strong team that can challenge at the top of the Bundesliga. First, I need to secure a regular place."
Wolfsburg managing director Dieter Hoeness also expressed his delight at pulling off such a major coup.
He told the club's official website: "Simon is not only a strong, aggressive defender, he also has a good personality on the field. He has the qualities of a leader.
"We have seen him play on several occasions, most recently at the World Cup warm-up game against Senegal.
"It is no secret that we wanted to sign him in the January winter break but Palermo were not ready, at the time, for the change.
"We are happy that it has all come together now and that he has chosen us."