The deal for the 24-year-old includes a purchase option next summer, meaning Torino will have an opportunity to make the move permanent.
The Croatia international made 31 appearances for David Moyes' men during the 2021/22 campaign, but scored just one goal in the process and failed to contribute a single assist.
Vlasic joined the Premier League club from CSKA Moscow during last season's transfer deadline day for over £25million.
The player put pen to paper on a five-year contract, but only managed one season before being sent out on loan.
Vlasic made four appearances during pre-season and scored one goal during a 1-1 draw with Reading. Nevertheless, he was not involved in the Premier League opener against Man City and watched the match from the substitutes bench.
West Ham tweeted: "We can confirm that Nikola Vlasic has joined Torino on loan. Everyone at the club would like to wish Nikola the best for his loan spell in Turin."
During the 2017/18 campaign, Vlasic spent time at Everton where he made 12 Premier League appearances.
He then moved to CSKA Moscow where he enjoyed considerably more success having scored 33 goals in 108 games during his last three seasons in the Russian capital.
Vlasic has made 39 appearances for this nation and scored seven goals along the way. One of those came against Scotland during a 3-1 victory at Euro 2020.