The 22-year-old, who has an English father and is an Everton supporter, had attracted interest from Arsenal but André Villas-Boas has secured his signature on a pre-contract agreement with six months remaining on his current deal. Holtby is highly regarded in Germany after captaining the Under-21 side and earning three caps at senior level.
Schalke were keen to tie him down to an extended contract but the player has harboured long-term ambitions of moving to the Premier League. However, given the attention from Tottenham's north London rivals and reported interest from Liverpool, the transfer will be regarded as a coup at White Hart Lane, where he is understood to have a four-year deal.
Steffen Freund, Spurs' German assistant manager, believes Holtby will easily be able to adapt to English football after three years with Schalke in the Bundesliga, having started his career with Borussia Mönchengladbach before moving to Alemannia Aachen, ahead of loan spells at Bochum and Mainz. Holtby has made 75 appearances for Schalke in all competitions, scoring 11 times for the Gelsenkirchen-based club.
"For Lewis it would not be a problem because he is half English and loves the Premier League," said Freund. "I know him, he is the captain of the German Under-21 team and will lead them at the European Championship in Israel next summer. I worked for the Under-16s and Under-17s for the last three years, that is why I don't know him really well but what I can say is that he is a really good player."
Holtby becomes Tottenham's second signing of the January transfer window after they confirmed on Thursday that the Standard Liège defender Zeki Fryers will be added to their development squad.
Tottenham will rotate their starting XI for Saturday's FA Cup third-round match with Coventry City. Benoît Assou-Ekotto is set to return from a knee injury following a four-month absence while Scott Parker could start after coming off the bench in the last five matches. Freund said: "I'm really proud of Scott Parker. To be patient is not easy but that shows how strong we are at Tottenham, especially in the centre of midfield.
"We have a lot of players there, don't forget Tom Huddlestone, Jake Livermore and Tom Carroll, they are waiting to start in those two positions."
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