The German joins the Liga outfit on a free transfer following a successful season with Swiss Super League champion Basel.
The 27-year-old spent two and a half years in Switzerland but with his contract coming to an end he has chosen to move to Spain, signing a three-year deal in Seville.
Steinhofer, who can play in defense or midfield, helped Basel to the defense of its Super League title last season as well as a Europa League semifinal place, but he cannot wait to start life at his new club.
"I am very happy to play for Betis," he told the club's official website. "This is a very important step in my life and in my football career.
"I know I am at a big club and a in a spectacular League. Betis have been a club that have been following me for a long time and I have to thank them."
The German becomes Pepe Mel's sixth signing ahead of the new season, with even more arrivals expected before August.