Botha has been a talisman for South Africa in recent years and helped them to their 2007 World Cup triumph and 2009 Test Series victory over the Lions.
During that tour Botha played in the Springbok's first and second Test triumphs before being suspended for the third and final.
Botha is the latest glamour signing by Toulon, after Australian star Matt Giteau agreed a similar deal.
Toulon already boast a host of top-class players, including former Lions Jonny Wilkinson and Gavin Henson.
"This is the type of player that we actually wanted. He is a perfect fit for us," said Toulon president Mourad Boudjellal.