The 26-year-old becomes the latest new arrival since Marco Silva replaced Leonardo Jardim in late-May, and will challenge for a starting place with Islam Slimani, Fredy Montero and Carlos Mane next season.
Tanaka has regularly scored goals in the J.League for Kashiwa with his five this season taking him to 34 over the past four years.
His club form has earned him an international cap - in 2012 against Iceland - but he was not selected for the Japan squad for the 2014 FIFA World Cup by Alberto Zaccheroni.
Sporting made the announcement on their official website, and revealed the player will have a €60 million release clause in his contract.
The statement read: "Sporting Clube de Portugal and Kashiwa Reysol have reached an agreement for the transfer of the player Junya Tanaka on a five-year contract, with a buy-out clause of €60,000,000."
After finishing second in the Primeira Liga last season, Sporting are looking to go one better under Silva, and claim their first league title since 2002.
