The Croatian landed in Madrid on Tuesday and after undergoing COVID-19 tests, officially signed for Los Rojiblancos on Thursday.
Grbic took his first footballing steps in the Hajduk Split academy before moving to Lokomotiva.
He has played for all Croatia's national youth sides and has been called up for the senior team's games against Portugal and France in September.
His void at Lokomotiva will be filled by Atletico academy product Alex Dos Santos.
Meanwhile, Grbic will replace Antonio Adan whose contract with Atletico has come to an end.
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