The Ivorian, 28, hit 15 goals this season and has been rewarded by the Valencia-based minnows with a one year deal that contains the option for another season.
His contract has a 10 million euro release clause.
Kone arrived at Levante on loan from Sevilla last summer.
He was rested for the final two matches of the season, ostensibly through injury although had he scored one more goal an automatic contract extension would have been activated with Sevilla.
Kone had also been linked with a move to the Premier League, with Tottenham, Aston Villa, Wigan and Reading believed to be interested.