Schalke have signed Uruguay international Carlos Grossmuller from Danubio.
The 24-year-old midfielder has put pen-to-paper on a four-year contract with Mirko Slomka's side.
"He is a versatile midfielder and his 12 goals last season showed that he has great attacking potential," Slomka told the club's official website.
"We have been looking for someone of his qualities to complement our squad, so I am delighted that the transfer has worked out.
"We will be able to be much more flexible with Grossmuller."
Grossmuller, who will join countrymen Gustavo Varela and Dario Rodriguez at the Veltins Arena, also expressed his joy at the move.
"The Bundesliga is very well known in Uruguay, especially Schalke," he added. "Getting the chance to play in the Champions League is a dream come true for me."
Meanwhile, Schalke defender Christian Pander has agreed a new contract in Gelsenkirchen.
The 23-year-old, who has reportedly been a target for Real Madrid, extended his current contract with the Royal Blues until 2011.
"I have grown up here and spent many years here. It was always the case that I would be talking to Schalke first," Pander said.
"We have reached the Champions League and we now want to establish ourselves there."
Schalke team manager Andreas Muller added: "We knew immediately that Christian was looking to stay and so the whole thing was over and done with quite quickly."
Pander follows goalkeeper Manuel Neuer and defenders Marcelo Bordon and Mladen Krstajic in signing new deals this summer.