Benalouane joins from Serie A side Atalanta on a four-year deal for an undisclosed fee.
The 29-year-old Tunisia international will challenge Robert Huth and Wes Morgan for a place in central defence.
Benalouane told Foxes Player: "In this city and in England, the most important thing is football. I’m very happy to be here. I hope I can do my best in this team, because I’m very, very happy to be here.
"For me it’s a new experience because it’s different to Italy. When I was young, I liked England because I wanted to play in England for my experience.
"I’m very happy to be here. I hope I can do my best and use my experience in Italy. In Italy it’s more tactical. If I give power and tactics to this team, I think I’ll give something important."
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