The 28-year-old, who spent the second half of the 2012/13 season on loan at FC Schalke 04, penned a four-year contract with the Foals after undergoing a medical on Monday.
Versatility and technique
"In Raffael we are acquiring a versatile and technically gifted player for our attack. This transfer wasn't without complications, so we are happy it has gone through," commented Gladbach sporting director Max Eberl.
Raffael spent four seasons in the Bundesliga between 2008 and 2012 with Hertha BSC Berlin, before leaving to join Dynamo after the capital club were relegated at the end of the 2011/12 season. He scored two goals and assisted a further five in 16 appearances for Schalke in 2012/13.