"Juventus announce an agreement has been finalised with VfL Wolfsburg for the sale of Diego for 15.5 million euros," the Italian club said in a statement.
Wolfsburg, the 2008/09 Bundesliga champions who, like Juve, are rebuilding under new coach Steve McClaren having limped in eighth last season, said Diego's contract would run until 2014.
Juve finished seventh in Serie A last term and new coach Luigi Del Neri had previously said Diego was going to count as one of his four 'strikers' this season.
The 25-year-old failed to shine in his year in Turin after signing from Werder Bremen for 24.5 million euros.
Juve decided to cash in and quickly made Quagliarella their eighth major pre-season signing, with time ticking down in the August transfer window.
"Juventus announce a deal with Napoli to loan Fabio Quagliarella with the right to sign him permanently at the end of the season," the Italians said.
EARLY DEBUT
The 27-year-old may face Bari in the club's Serie A opener on Sunday, given strikers Amauri and Vincenzo Iaquinta are injured.
Quagliarella will cost 15 million euros if bought outright.
Udinese forward Antonio Di Natale snubbed a move to Juve on Thursday so attention quickly turned to Quagliarella, one of the few Italy players to come out of a dismal World Cup with any credit after his fine goal in the defeat by Slovakia.
He said it was a dream when he joined hometown club Napoli from Udinese last year and went on to hit 11 league goals.
After being left out of Napoli's Europa League win over Elfsborg on Thursday he told angry fans: "Sometimes you have to think with your head not your heart".
Napoli are unlikely to replace him having already bought Uruguay World Cup striker Edinson Cavani from Palermo.
Media reports have also said Juve are close to selling forward David Trezeguet to Spanish top-flight team Hercules.
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