Benfica said in a statement released on its website on Thursday that the Brazilian will be on loan for one year, reports Efe.
Danilo, 20, started his career at Brazil's Vasco da Gama and then moved to Sporting Braga in 2014.
The Brazilian player spent the last season at Valencia, where he played 33 games.
Danilo said he is "very happy" playing with Benfica and hopes to win more titles with the Portuguese team.
The Brazilian player appeared with his national team in the 2015 FIFA U-20 World Cup, when Brazil were runner-up.
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