The 25-year-old joins the Spanish side in a deal reported to be worth up to 40 million euros.
Lee returns to Spain after three seasons with PSG, where he made 124 appearances, scoring 16 goals and providing 16 assists.
"Atletico de Madrid and Paris Saint-Germain have reached an agreement for the transfer of Lee Kang-In, who has signed for our club until June 30, 2031," said the LaLiga club.
"A talented left-footed midfielder, the 25-year-old can operate in the attacking midfield role or from either wing, and stands out for his vision, exquisite ball control and ability to pass and shoot," added his new club.
Before moving to France in 2023, he played for Spanish clubs Valencia and Mallorca.
During his time in Paris, Lee won two Champions League titles, one UEFA Super Cup, one Intercontinental Cup, three Ligue 1 titles, two French Cups and two French Super Cups.
Lee made his South Korea debut in 2019 and has earned 50 caps for his country. He represented South Korea at the 2022 and 2026 World Cups.
