The 25-year-old swapped Blackburn for Spain last season and went on to spend the second half of the LaLiga campaign on loan at Sheffield United, where he scored six goals in 14 top-flight appearances.
Brereton Diaz has now made a permanent move to the Premier League by joining Southampton signing a four-year deal with the promoted club.
"I'm absolutely buzzing," the Stoke-born Chile international said. "It's been smooth these past couple of days, and I'm happy to get everything sorted and signed.
Saints boss Russell Martin said: "I'm really delighted to welcome Ben to the group. He's a versatile and intelligent footballer, capable of playing in a number of positions across the forward line."
Brereton Diaz became Southampton's second signing of the day having earlier announced the acquisition of Kuryu Matsuki from FC Tokyo. The 21-year-old midfielder will spend the season loan at fellow Sport Republic club Goztepe.
English south coast rivals Bournemouth, meanwhile, have signed Spain Under-21 defender Dean Huijsen from Juventus for an undisclosed fee.
The 19-year-old Dutch-born centre-back has signed a six-year deal with the Cherries after spending the second half of last season on loan at Roma, for whom he scored twice in 13 appearances.
Meanwhile, Nottingham Forest have allowed midfielder Lewis O'Brien to join Los Angeles FC on loan until December, with the MLS side having the option to make the transfer permanent.
And on a busy day of transfer activity, Everton have bolstered their defence with the signing of Republic of Ireland centre-back Jake O'Brien from Lyon.
Brien - who won his first Ireland cap against Hungary in June, is the club's fifth signing of the summer following the loan return of Leeds winger Jack Harrison and arrivals of midfielder Tim Iroegbunam and forwards Iliman Ndiaye and Jesper Lindstrom.
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