The striker spent the 2019-20 season in Paris on loan and the French champions have taken their option to sign the Argentine permanently, keeping him in Paris until 2024.
Sources had previously told ESPN the deal would be worth €50 million euros plus €7m euros in potential add-ons, which is significantly less than the €70m release clause included in his loan agreement.
Inter recognised that due to the current situation with the coronavirus pandemic, it was fair to lower their asking price. Inter have long wanted to sell the striker, who joined the Nerazzurri seven years ago from Sampdoria.
In a statement on Inter's website, the club thanked the striker for his contribution to the team during the six seasons he spent with them.
Icardi made his mark on PSG last season, making 31 appearances in the 2019-20 season. He scored 20 goals and provided 4 assists on the team's road to picking up the Ligue 1 title.
PSG had a 12 point lead on nearest rivals Marseille when the league was cancelled due to the coronavirus pandemic.