The midfielder has been reunited with new PSG coach Christophe Galtier, signing a five-year contract with the French champion.
Sanches had been linked with Serie A champions Milan, but PSG emerged as the favourite to land the 24-year-old.
The Portugal international won the 2020-2021 Ligue 1 title playing under Galtier at Lille, where he arrived from Bayern Munich in 2019.
Sanches told PSG's official website: "I'm really happy to have arrived here in Paris. These last few days have been really important for me and for my family.
"I'm sure that I've made the right choice by signing for the club. I chose Paris Saint-Germain because I think that it's the best project for me. Staying in France was important to me, as I know this league already."
The former Benfica man is relishing the opportunity to work again with Galtier, who replaced the sacked Mauricio Pochettino last month.
Sanches said: "I know him well. He's a good coach who helped me improve a lot after I came into Ligue 1. Together, we even managed to win the league with Lille.
"We worked well together, and I'm happy to be working with him again, as well as with his coaching staff. Working with a manager that you know always makes things easier. The communication between you is simpler."
The arrival of Sanches comes with Georginio Wijnaldum expected to join Roma and Idrissa Gueye a target for his former club Everton.
PSG starts the defence of its Ligue 1 title with a trip to Clermont on Sunday (AEST).