The Frenchman was expected to leave Vicarage Road following the Hornets' relegation from the Premier League last season and joins a Toffees side showing their intent in the transfer window.
Deals for Napoli midfielder Allan and Real Madrid attacker James Rodriguez have recently been completed, while Everton also signed young left back Niels Nkounkou from Marseille on a free transfer.
Doucoure told Everton's website: "I have been waiting a long time to come here and now it has happened so I am very happy.
"I had some interest from other clubs but from the beginning when Everton showed an interest in me I told my agent to focus on Everton. It was the only club I wanted to join.
"Everton has a big history in English football and it is a good club for me to have a step up in my career. I am very happy now to be an Everton player and very excited for the future."
The Merseyside club were previously in for Doucoure last summer, when Marco Silva was in the managerial dugout, but their offer in the region of £35m was turned down.
With the Rodriguez, Allan and Doucoure deals all now confirmed, how Everton's midfield will look come their Premier League opener at Tottenham on Sunday will be fascinating.
Last season Carlo Ancelotti mainly employed a 4-4-2 with various players, including Andre Gomes, Gylfi Sigurdsson, Tom Davies and Fabian Delph, featuring in central midfield.
It would be expected that Rodriguez plays centrally behind a sole striker, while Allan and Doucoure sit in holding roles. The latter did end up featuring further forward for Watford frequently last season, though his tally of four Premier League goals was his worst since 2016/17, his first campaign in English football.