The 20-year-old made a switch to Parc des Princes from AS Monaco as he joins the Paris club on a season-long loan deal. PSG will have an option to make his loan move permanent next summer and should they decide to activate it, then Mbappe will be at the club until 2022.
A statement on PSG's official read, "Paris Saint-Germain is delighted to announce the immediate arrival of Kylian Mbappé."
"The international French striker is transferred on a loan basis from AS Monaco until June 30 2018. The loan agreement also includes a call option for Paris Saint-Germain which, when exercised, will bind the player to Paris Saint-Germain until June 30 2022."
Mbappe impressed for Monaco last season as they went on to win the Ligue 1 for the first time since 2000. He scored 15 goals and registered eight assists in the league, while scoring another nine goals in the Champions League and cup competitions during the 2016/17 season.
The France international's form saw him attract interest from top clubs across Europe, including clubs in England. Real and the Champions League winners' league rivals Barcelona were keen on signing him.
In addition to this, City, Arsenal and Liverpool were also in the race for his signature. However, the English clubs were nowhere close to agreeing a fee with Monaco for Mbappe. The Guardian earlier reported that 12-time European winners have reached an agreement with the French champions and the fee is believed to be around £161m ($208.1m).
However, Mbappe snubbed advances from top European clubs in order to join Monaco's league rivals, PSG.
"It's a great day for me. First, I join Paris Saint-Germain, a great club where there is everything for me to improve, then I score my first goal with the national team," Mbappe told PSG's official website.
"It could have been worse! Paris Saint-Germain is the ideal project to continue my progress. I'm an ambitious player and it's an ambitious club, so there is all we need to grow together and achieve great things.
"There are great players in Paris. All the right conditions come together to be able to enjoy myself and work hard. I have one match left with Les Bleus and then I can think about all that."