The deal is more than the 19-year-old Portuguese forward’s €120m release clause and Atletico will pay the fee in instalments.
Felix, who was linked with Manchester United, Manchester City, Liverpool and Real Madrid, scored 15 goals in 26 appearances in his first season of senior football last term.
He also became the youngest player to score a hat-trick in the Europa League when he hit a treble against Eintracht Frankfurt.
He made his international debut for Portugal in the Nations League semi-finals last month.
A statement on Atletico’s official website said: “Our club and Benfica have reached an agreement over the transfer of the young Portuguese footballer.
“The forward has already passed his medical at the Clinica Universidad de Navarra and signed his new contract for the next seven seasons.”
Only Neymar, Kylian Mbappe, Philippe Coutinho and Ousmane Dembele have moved on for more.
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