The 25-year-old forward doubled the previous record fee with his 222 million euro ($264 million) move from Barcelona.
The 25-year-old forward doubled the previous record fee with his 222 million euro ($264 million) move from Barcelona and will earn a reported 30 million euros ($35.5 million) a year under the new deal.
"I am extremely happy to join Paris Saint-Germain," Neymar said late Thursday.
"Since I arrived in Europe, the club has always been one of the most competitive and most ambitious. And the biggest challenge, what most motivated me to join my new teammates is to help the club to conquer the titles that their fans want."
"Paris Saint-Germain's ambition attracted me to the club, along with the passion and the energy this brings. I played four seasons in Europe and I feel ready to take the challenge."
"From today, I will do everything I can to help my new teammates, to open up new horizons for my club and to bring happiness to its millions of supporters around the world."
PSG said that Neymar will appear at a press conference at the club's Parc des Princes at 1130GMT on Friday.
He will then be presented to fans at the same ground at 1345GMT on Saturday before the season-opening Ligue 1 fixture against promoted Amiens.
PSG wasted no time in pressing Neymar's commercial value by announcing that shirts bearing his name will be on sale from 10h00 am (0800 GMT) Friday at the club's megastore on the city's iconic Champs Elysees.
Football legend Pele congratulated Neymar on his move, telling his successor in the famed Brazilian number 10 shirt: "Good luck for your new challenge".
"Paris is a beautiful city and one of my favourites in the world," three-time World Cup winner Pele wrote on Twitter.
The transfer is more than double the previous world record set by Manchester United's capture of Paul Pogba from Juventus last year for 105 million euros, leaving many commentators aghast at the rampant inflation in football transfer fees.
Leading coaches such as Arsenal's Arsene Wenger and Manchester United's Jose Mourinho lamented that the move could cause even greater inflation in transfer fees and player wages.
"It also looks like the inflation is accelerating," said Wenger, whose 21 years at Arsenal have been characterised by prudent spending.
"It's beyond calculation and beyond rationality."
However, in the French capital there is huge excitement at PSG having landed a star name to finally make them feared among European football's elite with even French president Emmanuel Macron enthused.
"It adds attractiveness. Yes, it's good news," said Macron.
"Paris at his feet", splashed Le Parisien as Neymar dominated the French front pages Friday.
"A king comes to Paris," crowed L'Equipe newspaper.
The mood is understandably more sombre in Barcelona where attention has turned to who the Catalans can sign to replace Neymar in the month before the transfer window closes.
Neymar's Brazilian international teammate Philippe Coutinho of Liverpool and Borussia Dortmund's Ousmane Dembele have both been linked.
There is also scepticism at the role played by PSG's owners Oryx Qatar Sports Investments (QSI) at a time of political crisis for the energy-rich state which has been boycotted by its Gulf neighbours in recent months and will play host to the World Cup in 2022.
Spanish newspaper El Mundo described the move as a "state signing."
Spain's La Liga initially refused to accept payment for Neymar's buyout clause in a bid to stall the move over allegations of transfer irregularities, but Neymar's ex-teammates wished him well.
"My friend I wish you the best in everything that comes!!!" Luis Suarez posted on Instagram alongside a picture of the two hugging.
"Also thank you for your support, for everything that I learned with you and for the unique moments that we spent together!!!! Keep like this and never change love you little bro."