The Brazil international underwent a medical with club doctors on Thursday before signing a long-term deal and being presented with the club's number 15 shirt.
Paulinho is the Spanish club's first signing since Neymar left to join Paris Saint-Germain in a world record transfer.
The 29-year-old told reporters: "You have to face challenges with courage. I will try to do my job and I am prepared. It's a very satisfying moment. The dream I have been looking for has come true. I will give everything."
Paulinho played 63 games for Guangzhou in the Chinese Super League, helping them to two titles, one Chinese FA Cup and an AFC Champions League triumph in the process.
Prior to his spell in the Far East, he spent two largely unsuccessful years at Tottenham Hotspur between 2013 and 2015.