Palhinha moves from Portuguese giants Sporting Lisbon after agreeing a contract until the summer of 2027.
Fulham have parted with £20m for Palhinha's service.
A product of the famous Sporting Lisbon youth system, Palhinha has also played for Moreirense, Belenenses and Sporting Lisbon.
Palhinha won the Portuguese Primeira Liga with Sporting in the 2020/2021 season.
He has won 14 caps for Portugal and was part of their squad at last summer's European championships.
Speaking to club media, Palhinha said: "I'm very glad to be here. It's a big opportunity for me, for my career, to play in what is - in my opinion - the best league in the world.
"I've signed with a great club. The club wanted me, and I chose the club, so I promise the fans that I will do my best, and I hope we can win so many things in this season."
Fulham co-owner Tony Khan added: "Joao Palhinha has excelled in Portugal playing both club and international football. He's been one of our top targets in this window.
"While there were other prominent clubs aiming to secure his signature, we're thrilled that Joao chose to come here and that he wants to play for Fulham under our great coach Marco Silva, and we believe that Joao will be a valuable addition to strengthen the squad to compete this season in the Premier League."
Fulham will take on Liverpool in their first game of the 2022/2023 season.
