Icardi joined PSG this season and impressed with 20 goals in 31 games, before the Ligue 1 campaign was stopped and his club crowned champions because of the coronavirus pandemic.
"Paris Saint-Germain are delighted to announce the signing of Mauro Icardi on a permanent deal, following the striker's loan from Inter Milan during the 2019-2020 season," the French club said in a statement.
Icardi, who has eight caps for Argentina, but also holds an Italian passport, has signed a four-year deal until June 30, 2024.
Given the current economic situation the French champions succeeded in reducing the fee "to under" 60 million euros, as opposed to the 70 million euros initially requested, according to the French and Italian sports press.