The 30-year-old has penned a three-year contract with Jose Peseiro's side, who are rebuilding for an assault on next season's Greek Super League title and the UEFA Cup.

Karagounis, who played a starring role in Greece's remarkable Euro 2004 triumph in Portugal three years ago, spent the last two terms at Benfica following a two-year stint in Italy with Internazionale.

The midfield schemer, a hugely popular figure with the Panathinaikos supporters, is a graduate of the club's youth academy and made his debut for the Athens giants in the 1995/96 season.

Karagounis' arrival follows Panathinaikos' acquisition of Senegalese midfielder Dame N'Doye from Academica de Coimbra.

The 22-year-old, who scored four times in 25 league games last season, has signed a four-year deal.

Peseiro has also brought in 27-year-old Polish goalkeeper Arkadiusz Malarz from Skoda Xanthi and Greek Under-19 international Elini Dimoutsos from Ilisiakos.