The 25-year-old forward, who scored eight times in 17 La Liga appearances while on loan with Real Betis last term, joins from Mexican side Monterrey after passing a medical.
A statement on the club's official website confirmed: "Dorlan Pabon is a player of Valencia CF for the next four seasons after he passed a medical and signed his new contract on Tuesday afternoon.
"Dorlan Pabon will be presented on Wednesday August 28, at 19:30, at the Mestalla."
The signing of the Colombian - who only joined Monterrey from Parma in January - will go some way to filling the void left by Roberto Soldado's exit.
Boss Miroslav Djukic has been active in the transfer market in a bid to replace the Spain international, who joined Tottenham in a £26 million deal earlier in the window.
Helder Postiga has already arrived from Real Zaragoza, with Pabon expected to compete for a starting spot in Valencia's attack.
