The 32-year-old had been linked with a host of clubs once it had been made known by Paris Saint-Germain that he was available for transfer.
"I chose Albion because it is a club that is developing a lot. They had a very good season last season and I hope to help the team repeat that or even improve on it. I have some very good friends working and playing in this country and I asked them about Albion," the Express & Star quotes him as saying.
"What did they say? Well, Suarez told me Liverpool got beaten twice by Albion last season, so that was a very good reference. Both he and Poyet said Albion play very good football and are a serious club which wants to accomplish something. My first impression of the club is amazing."
Lugano will wear the number 14 shirt next season.