Georginio Wijnaldum left Liverpool at the end of the season after opting not to sign an extension to his contract at Anfield, and will now play under Mauricio Pochettino in France.
Barcelona and Bayern Munich had both been trying to sign the midfielder, who will captain the Netherlands at this summer’s Euros.
“Joining Paris Saint-Germain is a new challenge for me,” Wijnaldum said. “I join one of the best teams in Europe and I am determined to bring my desire and my determination to this ambitious project.
“Paris Saint-Germain has proved its status in recent years, and I am certain that together, for our supporters, we can go even further and higher.”
However, Wijnaldum, who made 237 appearances for Liverpool since joining from Newcastle in July 2016, won the Champions League and Premier League during his five-year spell at Anfield.
The 30-year-old was given a guard of honour in his final Liverpool game last month – the 2-0 home win over Crystal Palace – which guaranteed Jurgen Klopp’s side a spot in next season’s Champions League.
An emotional Wijnaldum told Sky Sports after the game: “I’m fighting against my tears right now. I’ve said that the people in Liverpool and the club, my team-mates, have shown me love during the five years, and I will miss them. I hoped to play many more years for the club but unfortunately things went different.”
When confirming his exit, Liverpool said: “Premier League winner. Champions League winner. FIFA Club World Cup winner. UEFA Super Cup winner. Liverpool legend.
“We thank Gini for all of his contributions to the club during the past five years and wish him the best of luck in the rest of his career.”