Spurs fought off competition elsewhere in Europe to sign the 21-year-old.
The signing takes the club's expenditure to over £30million following the arrivals of Gareth Bale and Darren Bent at White Hart Lane so far this summer.
"Younes possesses power, great pace and is good on the ball and strong in the air," said sporting director Damien Comolli.
"He is a good leader who showed a great desire to come to us despite interest and offers from numerous other clubs."
Kaboul is a centre-back who will compete with Michael Dawson and Ledley King for a place in the starting XI, with skipper King currently recovering from knee surgery and facing a race to be fit for the new season.
King's injuries last season led to Dawson playing in all but one of Spurs' games in the last campaign, leading to Comolli starting the search for cover.
"From day one he said 'I want to play for Spurs' and his personality made a big impression on Martin and myself," added Comolli.
"He has been a regular in the Auxerre first team for the past two seasons and is an excellent signing."
The transfer maintains Spurs' policy of signing young talent.
Boss Martin Jol added: "If you ask people in France who is seen as the hottest prospect in defence, they will say Younes Kaboul.
"We are very happy to have him on board. It's important to have quality players in defence and, with Younes, we have that."