The 24-year-old will join at the end of the 2017 season on a three-year contract after turning down the chance to sign a new deal at the Emirates Riverside.
Coughlin came through the Durham Academy, making his first-class debut against Australia A in 2012 as a 19-year-old and has since made 29 appearances in that format, averaging 27.23 with the bat and 30.34 with the ball.
The Sunderland-born player was named the Durham Jets’ captain for this year, where he scored 23 and 42 not out against the Notts Outlaws as he topped their batting averages with 333 runs at 41.62, in addition to taking 13 wickets at 24.84.
“It was an extremely tough decision to leave Durham, but I am very excited about joining Nottinghamshire and playing at Trent Bridge,” said Coughlin.
“It is a fantastic opportunity to continue my development and I look forward to working with Peter Moores and his coaching staff.”
Right arm seamer and right-handed batsman Coughlin has also featured in 28 List A games to date and took 12 wickets in eight Royal London One-Day Cup games this summer.
Notts’ director of cricket Mick Newell said. “We see Paul as someone who can be influential for us in all forms of cricket and fits the type of cricketer that we want to sign.
“He is a dynamic fielder, bowls quickly and is an aggressive batsman – he’s an exciting young player.
“From our perspective, he is coming to a club where we have a good coaching team in place who we think can improve him as a player. We want to help Paul be the best cricketer that he can be.”