The 22-year-old has spent the past two campaigns on loan at Netherlands club Vitesse Arnhem, where he was able to contribute to a side that won the KNVB Cup in April.
Baker proved to be an important member of England's squad during their Under-21 European Championships showing this summer, while the youngster also made appearances for the Blues during their recent friendly exploits in China and Singapore.
"It's going to be an exciting season, there are a lot of games in the Championship," Baker said of the move to Garry Monk's side.
"I'm here to give my input and hopefully get the club back to the Premier League. Hopefully we can do that together."
Boro will be hoping to bounce back from their opening-day defeat to Wolverhampton Wanderers when they face Sheffield United this weekend.