
The attacking midfielder, who has made 63 international appearances, was released by Borussia Dortmund in June after battling with form and injury.
Gotze, 28, is a product of Dortmund’s youth academy but switched to rivals Bayern Munich in 2013.
He returned to the Ruhr valley club in 2016 but failed to claim a regular starting spot and was allowed to leave at the end of his contract.
Gotze’s arrival is a coup for PSV, who appointed German coach Roger Schmidt in the close season and signed compatriot Adrian Fein from Bayern and fellow midfielder Dutchman Marco van Ginkel from Chelsea before the transfer window closed on Monday.
Gotze was linked with several top European clubs although he told German media most reports were “absolute rubbish”.