The winger, 22, played nine times for Wolves whilst on loan and his performances have persuaded Kenny Jackett to sign him permanently.
The arrival of Simon Dawkins and Patrick Bamford at Derby meant first-team opportunities were likely to be limited.
Derby boss Steve McClaren said: "It goes without saying we wish Michael all the very best in his future career with Wolves and thank him for his contribution in a Derby County shirt.
"We just felt he should be playing first team football at this stage of his career and unfortunately, with the options at his disposal, that is something we weren't able to offer him."
Jacobs joined Derby on a three-year contract from Northampton in 2012.