The Nigerian international, 24, has signed a five-year contract in a deal believed to be worth €20m (£17.2m).
Awoniyi joined the Bundesliga club from Liverpool last summer for £6.5m, after spending the 2020/21 season on loan, and scored 20 goals in 43 appearances.
The striker joined the Merseyside club in 2015 but spent six seasons on loan in Germany, Belgium and the Netherlands due to work permit issues. Now a full international, with four caps, Awoniyi helped the Berlin side finish fifth last season, just a point from the Champions League places.
Awoniyi said: “I’m very excited to be here at Nottingham Forest. It’s always been my dream to play in the Premier League and having spoken to Steve Cooper about our ambitions and looking at Forest, with its great history, it’s a club that I want to be part of.”
Cooper added: “There’s been a lot of interest in Taiwo from other Premier League clubs, and other clubs across Europe, so we’re delighted that he’s chosen Nottingham Forest.
“Our recruitment and coaching teams have been monitoring his progress closely over the last few months. He’s a player who we really believe in and we look forward to him going on to fulfil his potential and become a top Premier League striker with Nottingham Forest.”
Dean Henderson is expected to complete a season-long loan move from Manchester United next week, with Brice Samba’s transfer to Lens believed to be underway.
The England goalkeeper is keen to reclaim his place in the squad ahead of November’s World Cup in Qatar. The 25-year-old joined the Old Trafford club at the age of 14 but a loan spell at Sheffield United in 2019/20 saw him gain his first cap in October 2019.
Both signings are a huge statement of intent for Steve Cooper, as well as the financial backing of Evangelos Marinakis, the work of the recruitment team and the negotiations of the management team. Delivering this early in the transfer window allows both players to settle, but also acts as a draw for other potential signings.
The club are also believed to be pursuing Morgan Gibbs-White, Moussa Niakhaté, Issa Kabore, Joe Rodon and Neco Williams, among numerous other names.