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The Italy international, who had also been a target of Napoli after impressing at Euro 2012, has completed the move after successfully passing his medical.
And with left-back Balzaretti's contract having been set to expire in June 2013, Palermo did not think they had any choice but to accept Roma's offer.
"He had no intention of staying," said club president Maurizio Zamparini.
"At the end of next season, as with Antonio Nocerino last year, he'd have been free to join anyone he wanted.
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"It would've been a crime for us to turn down the 4.5m euros that Roma were offering."
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