The 20-year-old has signed a five-year contract until June 2031. Hoffenheim, who finished fifth in the Bundesliga last season and will compete in the Europa League, move quickly to fill a position of need.
Hoffenheim sporting director Andreas Schicker described what the club are getting.
"Mats Rots is a modern-style wing-back. He brings clean passing, good dynamism and high attacking quality. At the same time Mats has the physical attributes for defensive one-on-one situations and gives us several variations in build-up play with his versatility," Schicker said.
Rots did not hide his motivation for choosing the Bundesliga.
"It was my absolute desire to move to TSG Hoffenheim and thereby into one of the three top European leagues," he said.
"I get the opportunity here to fully develop my talent under the best conditions and take further developmental steps. TSG is known for promoting young players and sustainably bringing them to an even higher level."
Rots started all 34 Eredivisie matches for Twente last season, scoring four goals and contributing four assists. That level of consistent performance persuaded Hoffenheim to pursue him aggressively over competing interest — Ajax had previously tabled an offer, and PSV were also monitoring his situation before the deal with Hoffenheim was confirmed.
The transfer eclipses the previous Twente record set by Dusan Tadic, who joined Southampton for €14 million in 2015. The base fee of approximately €10 million will rise to €16 million through guaranteed performance-related clauses. Twente have also secured a sell-on percentage.
Rots had spent part of last season on loan at Heracles before breaking into Twente's first team — a turnaround that made him one of the most sought-after young defenders in the Netherlands.
At 20, he has time on his side. Hoffenheim are betting he uses it well.