The 26-year-old former Hamburg player, who has made 22 appearances for his country, is part of the club's plans to rebuild their squad after they finished sixth in the league last season and failed to qualify for European competition for the first time since 1997.
Financial details of the transfer were not disclosed.
"Panathinaikos FC announces that it has reached an agreement with the Swedish international footballer Marcus Berg, who has signed a four-year contract," said Panathinaikos in a brief statement.
Berg scored more than 50 goals from 2005-2009 in spells with IFK Gothenburg and Groningen, before moving to Hamburg in 2009.
He struggled with injury and loss of form in Germany, scoring five times in 43 appearances, and spent a season on loan at Dutch club PSV Eindhoven where he had eight goals in 25 outings.
Berg is Panathinaikos's third off-season signing, after the arrivals of fellow Swede Emir Bajrami and Dutchman Mendes da Silva, both midfielders.