The 23-year-old had spent most of the summer training with the Championship club after he was told that he was free to leave FC Basel.
Having impressed manager Tony Mowbray, the goalkeeper has penned a permanent contract at the Riverside.
"First and foremost he's a young goalkeeper," said Mowbray. "He's 23 but in goalkeeping terms and in terms of playing games he's young.
"He's made some good saves in pre-season, he's been very positive and we hope he can take what we've seen into the first team if and when he has the opportunity to play.
"I would think he will train this week and be on the bench at Barnsley on Saturday."
Leutwiler spent part of last season on loan with FC Schaffhausen.