The 26-year-old midfielder underperformed for Genoa last season but his impressive displays for Portugal at Euro 2012 have secured him a permanent move to Ukraine
The Portugal international, who played a key role in his country's run to the semi-finals of Euro 2012, has penned a four-year contract with the Ukrainian outfit.
"I was aware of interest from many clubs, but Dynamo were the most persistent in the negotiations," Veloso told the club's official website.
"I also liked the fact that this is a club with great history and ambitions, and I was very interested by the opportunity to play in the Champions League."
The 26-year-old, who has been capped 29 times by the Seleccao, joined Genoa from Sporting Lisbon in 2010.