Details of the 26-year-old's contract, including its length, have not been released.
"Catania can confirm reaching an economic agreement for the next few seasons with the striker Sebastian Eduardo Leto," said a statement on the club's website.
The former Liverpool striker joined Panathinaikos in 2009 after previously being on loan at their arch-rivals Olympiakos.
However, his career in Athens stalled after a serious knee injury suffered in January last year.
Catania are safely in mid-table heading into the final weeks of the Serie A season.