Leicester will have to pay compensation. N'Guessan is out of contract but because he's under 24 Lincoln will receive a payment which is currently being negotiated.
Foxes manager Nigel Pearson said: "Dany is an extremely exciting prospect.
"He impressed us during our home game against Lincoln in the Johnstone's Paint Trophy last season as he is a versatile and talented player."
Pearson added: "We are certain that the addition of Dany will heighten competition for places, and with his potential to improve he has a bright future in the game."