The 27-year-old winger will now travel to Wales in order to undergo a medical and agree personal terms.
Hernandez, who has been capped four times by Spain, made 30 La Liga appearances for Valencia last season, scoring three goals and providing the same amount of assists.
|EURO DREAM FOR SWANS
|14/1||Swansea are 14/1 with Paddy Power to finish in the top six in the Premier League this season|
The midfielder becomes Michael Laudrup's third arrival from La Liga this summer after the signing of Michu from Rayo Vallecano and the loan arrival of Jonathan de Guzman from Villarreal.
"Valencia CF have reached an agreement with the Swansea City for the transfer of Pablo Hernandez, who has traveled to Wales to pass a medical. The club wishes to thank Pablo for his professionalism and involvement throughout his career on our team and we wish him all the luck in his new career," a statement read of Valencia's official website.
Hernandez has been targeted as a replacement for Scott Sinclair, who is likely to secure a move to Manchester City before the close of the transfer window after the Premier League champions revived their interest in the 23-year-old.