The former Chelsea defender, 24, operated in central midfield when making 10 appearances for the Owls during an eventful stint at the club, which saw him sent off twice and find the net once.
He was released by the Blues at the end of last season and Wednesday have beaten off competition from a number of clubs to land his signature.
Sheffield Wednesday's other new signing Keiren Westwood faces stiff competition for the No.1 jersey after Chris Kirkland put pen to paper on a new one-year contract.
Kirkland, 33, a regular for the Owls since his move from Wigan in May 2012, looked set to leave Hillsborough as he stalled over signing a fresh deal.
But the former England and Liverpool goalkeeper's future has now been resolved and he will be joined in pre-season by Westwood, who signed for Wednesday on a two-year contract on Monday evening.