Real Madrid have confirmed that Spanish U21 international Isco has joined the club from Malaga on a five-year deal.
The midfielder becomes Real's third summer signing after Dani Carvajal arrived from Bayer Leverkusen and Casemiro completed a permanent deal.
"Real Madrid and Malaga have reached an agreement for the transfer of Francisco Roman Alarcon Isco, who will be tied to the club for the next five seasons," said a statement on Madrid's website.
Isco, who has been on international duty in the European U21 championship, will be presented on July 3 after undergoing a medical.
The 21-year-old previously admitted joining new boss Carlo Ancelotti's side would be an 'exciting option'.