Harding, 21, was out of contract at the Withdean Stadium, but Brighton were entitled to compensation because the player is under 24.
Leeds must pay an initial £450k in two tranches, with a further £400k linked to appearances, international caps and possible promotion success.
The defender told BBC Radio Leeds: "I'm relieved its all over."
The ruling also gave Brighton a 20% sell-on clause involving any future transfer.
Brighton chairman Dick Knight told BBC SCR: "When we look in the context of other players moving while out of contract this compares extremely favourably. We've got a result which is fair to us and in some ways justifies the amount of effort we've put into developing Dan."
Leeds had initially offered a reported £250k for the England Under-21 international, while Brighton had valued him at around £1.5m.