Joselu, 22, returns to the country of his birth after three years at Madrid. He scored 26 goals for their B team in Spain’s third division last season.
He has signed a four-year contract
“Joselu has already proved his class at Real,” Hoffenheim coach Markus Babbel said.
“He is young, but with great potential. He will adapt well to the team.”
Born in Stuttgart to Spanish parents, he moved to Spain aged four.
He joined Real from Celta Vigo in 2009 but only made two appearances for the first team, scoring both times.