Jese became the fifth player hired by the French champions this offseason after Hatem Ben Arfa, Grzegorz Krychowiak, Thomas Meunier and Giovani Lo Celso.
The 23-year-old Jese scored 13 goals in 62 league matches with Madrid over the last three seasons, and also featured in 15 Champions League matches.
Jese, who will work with new PSG coach Unai Emery, can play either in a central role or wide and is likely to be used as a second-choice striker behind Edinson Cavani.
"I am delighted to join Paris Saint-Germain, who have become one of Europe's most competitive clubs," Jese said. "Like Paris Saint-Germain, I have big ambitions for the coming seasons and it will be a great pleasure to work under the direction of Unai Emery, who has developed an excellent reputation in Spain, and across Europe, for his quality as a coach. I can't wait to begin this next challenge of my career."
No financial details of the deal were disclosed but French newspaper L'Equipe valued the transfer at 25 million euros ($28 million).
PSG president Nasser Al-Khelaifi, whose main goal this season is to win the Champions League, said Jese's "speed and creative qualities will complement our excellent attacking players."
"With Jese, our squad is now, more than ever, armed to confront the coming challenges and meet the expectations of our fans," Al-Khelaifi said.
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