Parejo came up through the Real Madrid youth ranks and had a spell on loan with English side Queens Park Rangers in 2008, before spending the last two seasons with Getafe.
Local media said the 22-year-old moved for around €5 million. Valencia's reserve goalkeeper Miguel Angel Moya moves the other way on loan for next season.
Moya will help cover for Getafe goalkeeper Oscar Ustari, who tore knee ligaments on international duty with Argentina this month.
Valencia finished third in La Liga to earn direct qualification for the Champions League group stages next season.
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