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The 26-year-old - capped twice by Argentina - arrives at The Hawthorns on a two-year deal, with the option for an extra 12 months.
Blanco's transfer was revealed just half an hour before their Premier League clash with Swansea City on Saturday.
And head coach Alan Irvine declared his delight at capturing the club's 11th signing of the transfer window.
"I'm really pleased that we've managed to add Sebastian to the squad," he told West Brom's official website. "He's an Argentina international who joined Metalist for a lot of money.
"Unfortunately, he suffered an injury not long after the move, which held up his progress.
"Since then, he's shown his quality. He's adept with both feet, is a nice crosser of the ball, creates chances and also scores goals.
“With the players we've brought in this summer, the squad has a much better balance thanks to the hard work of the Chairman, [director of football] Richard Garlick, [technical director] Terry Burton and the recruitment staff."
