The 25-year-old has been linked with a switch to the Reebok Stadium since his one-week training stint earlier in the season.
"First and foremost we are absolutely delighted to secure Tim's services," manager Owen Coyle told the club's official website. "He is a US international, a player that year on year has progressed and got better, and he will continue to do that.
"He was trailed by a number of clubs, including West Brom and also Arsenal who tried to sign him in the summer, so it is great that he sees his future here.
"Tim is everything that we want in the players we are bringing to the club when we spend in the transfer market. He is young, has a tremendous attitude and a winning mentality. I know he will fit in well with the rest of the squad here at Bolton."
The Missouri-born defender has racked up seven caps for the USA national side.