Los Blancos announced the arrival of the France international on a deal until June 2025, with Lyon confirming they have received €48m up front with a further €5m in add-ons.
Mendy has spent the past two seasons with Lyon after joining from Le Havre in June 2017.
It marks another foray in the transfer market for Madrid, who have already bolstered their ranks for next season with the signings of Eder Militao, Luka Jovic and Eden Hazard.
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