Simons has signed a five-year contract with Ruud Van Nistelrooy's side as he returns to his homeland.
The 19-year-old joined PSG from Barcelona in the summer of 2019, signing a three-year contract.
Simons made 11 appearances in total for PSG's first team, including six in Ligue 1 when Mauricio Pochettino's side reclaimed the title from Lille last season.
PSG were keen to extend Simons' stay at the Parc Des Princes but the Netherlands youth international has opted to explore a new challenge instead.
"He was able to extend in France, but the youth international prefers PSV to the French champion, for whom he played nine games last season," a club statement said.
"We have seen almost all the matches this season where he appeared at the kick-off," PSV director of football John de Jong added. "Besides all the international matches he played for the Oranje squad, we saw him live in the Youth League in Leipzig, Paris, Bruges, Manchester and against Sevilla.
"In this he convinced us. Xavi has everything to grow into an important player for PSV. He would like to walk the path there with us."
Simons posted a farewell message to PSG on Twitter, saying: "After three wonderful years at the club, it’s time to say goodbye."
"I am very grateful to the coaches, the staff, my team-mates, and all the staff.
"PSG will always be in my heart. For the fans: from the bottom of my heart, Thank you. I love you!"
