The 27-year-old has signed a three-year contract with Schalke after opting to leave his previous Bundesliga employers at the end of his contract.
"We are delighted that Tranquillo has chosen to join us," general manager Horst Heldt told the club's official website. "He has enormous qualities and is very versatile."
Barnetta only made three league starts last season due to extensive fitness problems but has impressive pedigree in German football having joined Leverkusen from St Gallen back in 2004.
The midfielder has scored eight times in 61 international appearances.