PSG confirmed the loan on Monday but stressed that the deal is "without the option to buy".
"Paris Saint-Germain wishes Xavi a wonderful season with RB Leipzig," the club said in a statement.
The 21-year-old, who impressed with the Netherlands at Euro 2024, scoring the opener in the 2-1 semi-final loss to England, turned in a series of fine performances for Leipzig last season.
Eight goals and 13 assists in 32 Bundesliga matches was enough to capture the attention of several European clubs including Bayern.
Bayern sporting director Max Eberl, who was in the same role at Leipzig when the club signed Simons last season, praised the "outstanding" Simons last month, saying the German giants would "try everything" to bring the midfielder in alongside other summer signings.
Simons joined PSG in 2019 but has played only seven Ligue 1 games with the side, having also spent a year at PSV Eindhoven.
