The 29-year-old was out of contract at Nice and the French champions have beaten off competition from a number of clubs across Europe, reportedly including Southampton and Leicester, for his signature.
The 29-year-old was always thought to be heading away from the Riviera after scoring 18 goals last season and making France's reserve list for the Euro 2016.
He told his new club's website: "Signing with Paris Saint-Germain is a very happy and a proud moment. Paris Saint-Germain has always been a very special team for me, so to wear this jersey at the Parc des Princes is a childhood dream."
Ben Arfa, who has also played for Lyon and Marseille in France, will be keen to impress new PSG boss Unai Emery, who succeeded Laurent Blanc last month.
His career in England had ended in ignominious fashion last year, culminating in a failed loan spell with Hull after a falling out with Alan Pardew at Newcastle United