Rohan Ricketts has agreed to join Wolves when his contract with Tottenham ends at the beginning of July.
The 22-year-old, who spent the end of last season on loan at Molineux, was released by Spurs last week but remains registered with them until 30 June.
Ricketts will sign a two-year contract with Wolves, who will have the option of keeping him for a further year.
Wolves boss Glenn Hoddle said: "He is young, has lots of ability and is one for the future."
He added: "Rohan impressed during his loan spell here and once it was announced that he would soon be a free agent then we were keen to begin talks with him about a permanent deal.
"We are all looking forward to seeing more from him.
"A player of his age will improve and he is a good buy for us now and for the years to come."