The 23-year-old had been linked with a move to Molineux and will now sign a four-year contract with the club.
Wolves manager Stale Solbakken revealed that he has been tracking the Austria Under-21 international for several weeks.
"We have been searching for a central defender and Georg fits the billing," Solbakken told the club's official website.
"He wanted to come to England and we have been following him for the last six or seven weeks," Solbakken told the club website.
"It is a good signing not only for this season but also for the future because I think he has good years in front of him."
Margreitter will cost Wolves a reported £2m.