The Mexico international has spent this season on loan in the Netherlands after a similar spell at Bayer Leverkusen in the Bundesliga during the previous campaign.
Finding a regular place at Valencia proved difficult, though, and he has opted to move permanently to PSV to secure first-team football.
"We are pleased that after the loan period this season he will belong to PSV," said sporting director Marcel Brands.
"Andres is good business for PSV and the entire Eredivisie. We hope to enjoy the years ahead of him as a player of PSV."
Since arriving at Philips Stadion in August, Guardado has made 29 appearances in all competitions and helped Phillip Cocu's side open up an eight-point cushion at the top of the table.
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