The former Sporting Braga defender has joined the Spanish club on a permanent deal after impressing while on loan during the second half of last season
The Brazilian centre-back had only joined the Ligue 1 outfit last summer, but spent the second half of 2011-12 on loan at the then-Liga new boys, who eventually stayed up comfortably in 12th position.
He has now put pen to paper on a deal until 2015 with the Seville-based side, having reached an agreement with Saint-Etienne over the termination of his contract.
The 30-year-old shot to prominence in 2011 while playing for Sporting Braga, as the side reached the Europa League final before losing by a solitary goal to eventual champions Porto.
Paulao becomes Betis' fourth signing of the summer, following in the footsteps of Juan Carlos Perez, Ruben Perez and Agra.