The 19-year-old joins the champions from Polish club Cracovia, signing a five-year deal to 2021, according to the club's official website.
He has linked up with his new teammates in Stockholm, Sweden, ahead of City's International Champions Cup clash with Spanish champions FC Barcelona on Wednesday.
Kapustka made more than 50 appearances scoring six goals for Cracovia, with his impressive displays leading to an international debut for Poland in September 2015 against Gibraltar. He scored his first goal for the national team on his debut.
He was again part of the international setup during Poland's Euro 2016 campaign, putting in an outstanding display in their opening-match victory over Northern Ireland.
Kapustka will wear the no.14 shirt and becomes Leicester's fifth signing of the summer transfer window, following the arrivals of Luis Hernandez, Ron-Robert Zieler, Papy Mendy and Ahmed Musa.
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