The Colombia international signed a contract with Gregorio Manzano's side on Wednesday, with the Shanghai coach taking to Twitter to welcome their latest signing.
"We welcome our new player Fredy Guarin to Shanghai Shenhua, who joins with enthusiasm and desire," he said.
Shanghai later confirmed the news via their official Weibo account following the midfielder's successful medical in Spain, where the club have based their close-season training camp.
Guarin had made 16 appearances this season under Roberto Mancini at Inter but saw his role in the starting line-up come under threat following the arrivals of Geoffrey Kondogbia and Marcelo Brozovic.
The likes of Gervinho, who left Roma for Hebei China Fortune, and Ramires, who joined Jiangsu Suning from Chelsea, have completed big-money moves to China this month.