Porto have released a statement on their club website stating that they have sold Alvaro Pereira to Inter.
The initial fee is believed to be in the region of €10 million [£7.8m] but could rise depending on the player's appearances and the Italian club's performance over the season.
Should the Uruguayan appear 25 time for the Nerazzurri, the Portuguese side will receive an additional €2m [£1.5m] - and another million should Inter qualify for the 2013-14 Champions League.
A further €2m [£1.5m] will also be paid to Porto if Inter win either Serie A, the Coppa Italia or the Europa League, taking the transfer to a potential total of €15m [£11.8m].
Pereira arrived at the Estadio do Dragao in 2009 after signing from Romanian side Cluj for €2.5m [£2m]. The 26-year-old, who can play at left-back or left-wing, scored two goals in 72 matches during his three years in Portugal and has become one of the key players in Oscar Tabarez's national side.
The flanker is the seventh summer signing for Andrea Stramaccioni's side after Rodrigo Palacio, Matias Silvestre, Samir Handanovic, Gabi Mudingayi, Walter Gargano and Antonio Cassano all joined the Italian outfit.
Inter play their first league game away at Pescara on Sunday.