The Merseyside club did not disclose the financial details, but British media reported that the deal is worth around £17 million.
O'Brien started his career at his hometown club, Cork City, before moving to Crystal Palace in 2021. Having had loan spells at League Two club Swindon Town and Belgian side RWD Molenbeek, he made 32 appearances for Lyon across all competitions since joining them last year.
"Jake further strengthens our talented core of centre-backs and adds competition to our squad which can help us continue to progress," Everton manager Sean Dyche said in a statement.
"He is still young but has earned valuable experience both abroad and at international level, and has many impressive attributes to become a top-quality player for Everton in the Premier League."
Everton begin their Premier League campaign against Brighton & Hove Albion at Goodison Park on August 17th.
