The Frenchman, who moved to City from Rennes in 2009, has chosen to return to Hillsborough, where he made over 25 appearances on loan last season.
He made just one substitute appearance for City - in a League Cup tie against Aston Villa last season - and had two further loan spells at Carlisle United and Shrewsbury in the last 18 months.
"We have done a lot of hard work to get him here," Wednesday manager Dave Jones said.
"Other clubs were aware of what he did here last season and wanted him on board, but he really enjoyed his time here and wanted to come back.
"To get Jeremy on a permanent transfer represents a really good signing for the football club, and is a statement of intent because he is a really talented footballer. He is young and has a terrific future in the game."