The Republic of Ireland midfielder has stepped down from the top flight to spend the season with Fulham, who are managed by his brother-in-law Scott Parker.
It will become a permanent deal if “performance-related criteria” are met, Bournemouth announced.
Arter, 29, played over 250 games for Bournemouth across eight seasons before spending the 2018-19 campaign on loan at Premier League rivals Cardiff, who were relegated on the penultimate weekend.
He joins a Fulham team who suffered a dismal campaign in the top tier last term, never looking capable of surviving after coming up through the play-offs.
Arter told fulhamfc.com: “The club’s ambition to get straight back into the Premier League was something that definitely attracted me. The manager, I knew he really wanted me at the club.
“From the owner down to all the staff it’s clear that the target is to get promoted this year. It’s a challenge I want to be part of and I’m really looking forward to it.”
The former Charlton youth player, who grew up in south-east London, added: “It’s a great move for me for family reasons. I’ve always had a desire to play for a club in London. Ever since Scott signed here five or six years ago I’ve always come and watched Fulham and it’s great to be part of the club.”
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