The sought-after 25-year-old attacking midfielder passed a mandatory medical before putting pen to paper on a four-year deal that will keep him at the club until 30 June 2017.
"We're really happy that Max Kruse has decided to join us," said Gladbach sporting director Max Eberl. "He's a quick, versatile player with excellent technique, who's certainly going to give us more options up front."
With Igor de Camargo now at 1899 Hoffenheim on an initial loan basis and Mike Hanke set to depart the club when his contract runs out in June, Gladbach have earmarked Kruse for a pivotal role in their revamped frontline next season.
Great season at Freiburg
Kruse has scored nine goals and laid on six more in 28 Bundesliga outings so far this season for Freiburg, whom he joined only last summer from FC St. Pauli. He has been one of the stand-out performers in what is proving to be an exceptional campaign overall for the Black Forest outfit.
In all, the former Germany U-21 international has racked up 62 Bundesliga appearances for Freiburg, St. Pauli and his first senior club Werder Bremen since taking his top-flight bow back in 2007. Kruse also turned out 63 times in Bundesliga 2 for St. Pauli, bagging 20 goals.