"It feels good and I'm very happy to be here, to be part of this club. I'm looking forward to touching the ball, meeting my new team-mates and starting to play football," Merino told Newcastle's website (www.nufc.co.uk).
"I know it's a great club and a really nice city. I had different options but I think this is the right place for me to play."
Merino, who moved to Dortmund from Spanish side Osasuna at the start of last season, made eight appearances in all competitions for the German club.
He also featured for his country in last month's European under-21 championship in Poland, helping Spain finish as runners-up to Germany.
"He's a good size, has quality on the ball and he's very, very focussed and professional. Hopefully he's the kind of player we can improve a lot - he certainly has the mentality to get better and better," Benitez said.
(Reporting by Hardik Vyas in Bengaluru; Editing by Christian Radnedge)
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