The 21-year-old attacking midfielder, who will wear the No.23 jersey, was formally presented to the press at lunchtime after passing a morning medical.
Isco had infamously stated four years ago that he had little love for Madrid, whom he labelled as "arrogant", but at Wednesday's unveiling, he had nothing but praise for los Blancos.
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"For a player there is nothing greater than being at Real Madrid; it is the ultimate. I hope to enjoy it a lot here, and delight everyone, winning many titles for Real Madrid."
Perez, for his part, was keen to give Isco a warm welcome to the Bernabeu, admitting Madrid were delighted they had beaten off stiff competition from Manchester City for one of the most highly rated young players in Europe.
"Isco had offers from other clubs, but he has chosen to play for Real Madrid," the Blancos supremo said.
"Isco is joining a club that doesn't know the word impossible. This is your stadium and your home. Welcome to Real Madrid."
Isco came through the youth team ranks at Valencia before becoming a star during his two-year stay at Malaga.