The Wales international will formally complete the move on July 1, when his current deal with Blackpool expires.
Eardley, 24, has represented Wales on 16 occasions, having previously played for his country at U17, U19 and U21 level.
Born in Llandudno, Eardley began his career at Oldham and made over 100 appearances for the Latics, before he was signed by Blackpool in August 2009.
He has gone on to make over 100 appearances for the Seasiders as well, featuring regularly during their Premier League campaign of 2010/11.
Eardley: Birmingham a big club
Eardley is excited about the move to Birmingham and said: "I'm over the moon.
"To be signing for a club of this stature is the next step in my career and I'm hoping to get some games under my belt for a very big club and kick on.
"The opportunity came about and there were discussions between myself and those at the club, and I was just glad that we could get something agreed. I would never have turned down an opportunity to be signing for such a big club.
"I know from my time at Blackpool with Barry Ferguson and Kevin Phillips how big a club Birmingham is. I've played at St. Andrew's myself and the fans take the roof off. Everybody I have spoken to only has praise for the club.
"(Birmingham boss) Lee Clark touched on a few things about me personally, what he would like to do next season, and where he'd like to take this football club. It just totally made my mind up. After those chats, it was an easy decision."