The former River Plate and Central forward, 25, joins the Ukrainian runners-up on a five-year contract for an undisclosed fee.
"When the offer came from a great club like Dynamo I agreed to make the move,” he said.
“I'll be ready to help my team-mates in the next game against Arsenal Kiev.”
Dynamo can qualify for the Champions League if they win their two-legged third qualifying round clash in July and August.
Ruben initially struggled to make an impact at the Yellow Submarine, taking almost two years to get into the team.
But after a season on loan at Recreativo and a spell in the B team, he forced his way into the first-team squad and scored 14 goals in 65 appearances in all competitions.
He made his national team debut for Argentina last year, scoring in a 2-1 friendly defeat to Poland.
Despite scoring nine goals in 31 games for Villarreal last season, Ruben suffered relegation on the final day of the campaign.