The 27-year-old joined Sporting from Lecce back in 2023 and quickly established himself as a key player for the Lisbon club.
Hjulmand, a defensive midfielder, made 141 appearances across all competitions for Sporting, winning two Liga Portugal titles and a Taca de Portugal over his three years.
Atletico Madrid have now confirmed the signing of Hjulmand for a reported €40 million on a five-year deal until 2031.
"Atletico de Madrid and Sporting CP have reached an agreement over the transfer of Morten Hjulmand, who has signed for our club until 30 June 2031," read the club's official statement.
"The 27-year-old right-footed defensive midfielder stands out for his physical strength, his ability to win the ball back and his reading of the game, which enhances his anticipation and ball distribution. Welcome, Hjulmand!"