The 30-year-old Croatia international could then join the Bavarians permanently in June 2020 as the German side have an option to buy in the deal.
The Bavarian giants moved for Perisic after failing to seal transfers for top targets Callum Hudson-Odoi and Leroy Sane.
Perisic previously spent time in the Bundelsiga with Borussia Dortmund between 2011 and 2013 before joining Wolfsburg until his departure for Milan in 2015.
The winger also scored in the 2018 World Cup final as Croatia lost 4-2 to France in Russia, and has 23 goals in 82 international appearances.
On completing the move, Perisic told the club’s website:
‘I’m very glad to be back in Germany. FC Bayern are one of the biggest clubs in Europe.
‘We want to go on the attack, not only in the Bundesliga and the DFB Cup, but also in the Champions League.’
Sporting director Hasan Salihamidzic added:
‘Ivan will help us from the start with his extensive experience at a top international level.
‘He has good technique and he’s flexible in attack. I’m sure Ivan will settle in quickly as he knows both the Bundesliga and our coach Niko Kovac well.’
So Inter get maximum €25m for Perisic, who a year ago they could have sold for more than double that. Why? Inter have a long history of selling players at the wrong time. Usually it is right before they blossom into stars, Coutinho and Nicolo Zaniolo spring to mind, or they sell them a year too late at a steep disco. , as we see with Perisic and Icardi this summer.