The midfielder has turned down the chance to join the Champions League runners-up and will continue his career at the Veltins Arena side instead
The Gelsenkirchen side have announced the 18-year-old midfielder has signed a five-year deal with his new club and is keen to follow in the footsteps of Julian Draxler.
"Borussia Dortmund also wanted to sign me, but Schalke were the more appealing option," Goretzka said at a press conference.
"I decided to join Schalke after talking to Horst Heldt and Jens Keller. This is the club where I want to spend the next few years.
"They are growing something nice at Schalke and they do some great work with young players. That's one of the reasons why I picked Schalke.
"Julian Draxler's development has been impressive."
Goretzka came through the ranks of the Bochum youth academy and has been capped at Under-19 level for Germany.