The 21-year-old is now tied to the Ligue 1 champions through to the summer of 2023.
He is considered to be a useful addition at Parc des Princes for the present and future, with there still plenty of potential to be unlocked in the Germany U21 international.
Kehrer is delighted to have been given the opportunity to further his development in France, with the youngster excited to be joining an ambitious project.
He told PSG’s official website : “It is with much joy and ambition that I have signed for Paris Saint-Germain.
“Everyone in Europe knows how strong and exciting the Paris Saint-Germain project is and I couldn’t think of a better club for me to continue my progression and reach my objectives.
“I am going to meet some extraordinary team-mates and work with a coach that has done a great job in Germany in recent years.
“Everyone is going to be important in helping me and I in turn hope to help the team with my qualities. I also can’t wait to play at the Parc des Princes, a legendary stadium in European football.”
PSG claim to have fended off interest from “several big clubs” to land Kehrer, with club chairman Nasser Al-Khelaifi pleased to have emerged victorious in that particular transfer tussle.
He said: “We are very happy to welcome a player with the quality of Thilo Kehrer into our squad.
“During his career, Thilo has learnt to play different formations and in different positions, in defence and in midfield, and will offer a number of solutions to the coach, who already knows the player very well.
“Several big clubs were chasing his signature, and he chose Paris Saint-Germain to continue his climb through the ranks of European football.
“This transfer is in keeping with our policy of producing, and attracting, the talented stars of tomorrow, with the aim of helping them improve alongside great and experienced players.”
Kehrer has taken the vacant No.4 jersey at PSG.