The Ghana international has signed a four-year contract with the Royal Blues, joining for an undisclosed fee believed to be around 10million euros (£8.5m), and he is delighted to be back in Germany.
"The Bundesliga is the best league in the world and the best players also belong there," said the 26-year-old.
"I'm delighted to be back home."
Born in Berlin, Boateng made his Bundesliga debut with Hertha Berlin before moving to Tottenham in the Barclays Premier League.
He returned to Germany briefly to play for Borussia Dortmund before playing for Portsmouth for a season, famously tackling Germany captain Michael Ballack in the final of the FA Cup to rule him out of the 2010 World Cup through injury.
He then joined Milan, for whom he scored 17 goals in 100 games, including two against PSV Eindhoven in a Champions League play-off on Wednesday.
"We're really delighted to have been able to sign him because we've been working intensively on this for weeks," said Schalke's director of sport Horst Heldt.
"It was easy to convince Kevin to join us, but it was harder to convince Milan to sell.
"Kevin's done really well there and was a fans' favourite. He has great leadership qualities and we hope we will have a successful future with him."
Boateng will be ineligible for the Royal Blues in the Champions League, having already appeared in the competition for Milan, but he is available to make his second Bundesliga debut against Bayer Leverkusen on Saturday.
A suspension which was hanging over him from his previous spell in the Bundesliga has been wiped out, meaning he is available for selection.
"I'm absolutely delighted that I can play for a top club like Schalke," Boateng said. "This is a new challenge for me."
Boateng's arrival does not mean Julian Draxler will be sold, however.
"I don't know why that should be more probable now," said Heldt in view of increased speculation the Germany international could leave before the transfer window closes on Monday.
"It would be schizophrenic to sign one quality player and then let another one go. That is not what we want."