The 20-year-old was named player of the tournament at the European under-21 Championship this year. Financial terms were not disclosed, although reports in the Spanish media put the fee at 16.5 million euros ($18.8 million).
Spain under-21 midfielder Dani Ceballos has signed a six-year contract to join Real Madrid from Real Betis, the European champions said on Friday.
Ceballos will join up with Spain under-21 teammate Jesus Vallejo, who has recently returned to Real from a loan spell at Eintracht Frankfurt, and winger Marco Asensio, who had an impressive first full campaign last season scoring in the 4-1 victory over Juventus in the Champions League final.
He has been touted as one of the hottest prospects of Spanish football and according to reports in the Spanish media Real had to fight off attempts from Barcelona for his signature.
The 20-year-old will face a real battle in holding down a first team place at his new club, however, as he joins a talent- packed midfield also containing Luka Modric, Isco, Toni Kroos, Casemiro, Mateo Kovacic and Marcos Llorente.
His signing follows the departure of 2014 World Cup Golden Boot winner James Rodriguez, who joined Bayern Munich on loan earlier this week. ($1 = 0.8762 euros)