The 25-year-old striker, who performed well for Ecuador at the World Cup in Brazil, has been signed for an undisclosed fee from Mexican side Pachuca and has agreed a five-year contract.
The West Ham website reported: "The Hammers fought off competition from a host of Europe's leading clubs to secure the services of Valencia, who impressed hugely in scoring three goals for his country at the FIFA World Cup finals.
"Subject to a successful work permit hearing, he will become the first Ecuadorian to play for the Hammers and the ninth to appear in the Barclays Premier League.
"Valencia becomes West Ham's fifth summer signing following the captures of Argentine forward Mauro Zarate, Senegalese midfielder Cheikhou Kouyate, left-back Aaron Cresswell and promising youngster Diego Poyet."
Although the fee for Valencia will not be disclosed it is believed that it will be close to the club-record £15m which the Hammers paid for Andy Carroll last summer.
And manager Sam Allardyce will be hoping that the arrival of Valencia will ensure the team are less reliant on Carroll for an attacking threat.
The England forward struggled with injuries last season and West Ham found goal scoring difficult in his absence, although they emerged from a poor run of form to finish the season in 13th place.