The 26-year-old completed a medical at the Britannia Stadium today ahead of a move that had been rumoured to come to pass in recent weeks.
"It's a great club, an established Premier League club, so I am delighted to be here," Kightly told the club's official website.
"Any footballer wants to play at the highest level and I am grateful to Stoke for giving me the chance to stay in the Premier League.
"The club sold itself to me. What they have achieved over the past few years has been remarkable."
Stoke manager Tony Pulis added: "There is nothing better than to have strong competition in all areas of the squad and Michael's arrival will give us that in the wide positions.
"I've long been an admirer of Michael, not only in terms of him being a provider, but also the fact that he gets his share of goals."
Kightly has left Wolves after five years at the newly-relegated Championship club.