The 26-year-old, whose brother plays for FC Bayern Munich, took part in his first training session with the squad on Friday afternoon after a press conference at which he was officially presented as a Royal Blue. He could make his debut for the club against Bayer 04 Leverkusen on Saturday.
"I'm delighted to join a club like Schalke 04," said Boateng, who will wear the No9 shirt. "The Bundesliga's the best league in the world and the best players belong there. It was an easy decision for me. I'm happy to be home."
"We're very happy to have signed him," said Schalke chief executive Horst Heldt. "We've been working very hard these past few weeks to complete the deal. It was easy to persuade Kevin to sign for us."
The Ghanaian international, who actually represented Germany at U-21 level, began his career at Hertha Berlin, before moving to Premier League side Tottenham Hotspur. He then had a brief loan spell with Borussia Dortmund in 2008/09, before returning to England with Portsmouth FC. He joined AC Milan in the summer of 2010, after appearing for Ghana at the FIFA World Cup in South Africa that summer.
He has made 54 appearances in the Bundesliga with Hertha and Dortmund to date, scoring four goals.