Danilo has signed a six-and-a-half-year contract at the City Ground and becomes Forest's 24th new arrival since the club won promotion back to the Premier League last year.
The 21-year-old is the second player to join Forest from Palmeiras in recent weeks after Gustavo Scarpa completed a move to Steve Cooper's side.
Forest are understood to have beaten off competition from a number of clubs to sign Danilo and he is relishing the opportunity to play in England after talking to Scarpa regarding the transfer.
"I'm really happy to be fulfilling my dream of playing in the Premier League and playing for Nottingham Forest," said Danilo.
"I learnt a bit about the history of the club and saw they had won two European Cups. I spoke to Gustavo Scarpa as well, and he told me that Nottingham is a great city and Forest have a quality squad with really good staff.
"I will show a lot of determination and a strong desire to win and will always look to do my best on the pitch to achieve positive results.
"I'm excited about getting started and meeting my new team-mates."
Danilo is joining a Forest side on a three-match unbeaten run in the league which has lifted the club out of the relegation zone and up to 13th in the table.
Forest's sporting director Filippo Giraldi said: "We are really happy to welcome Danilo to our club and to our city.
"He is a fantastic talent that will be a great asset for the present and the future of Nottingham Forest."