The 21-year-old failed to make a first-team appearance for the Blues despite progressing through their youth ranks and arrives at Molineux for an undisclosed fee.
"He's a very good, exciting, attacking midfield player," Wolves manager Kenny Jackett told the official club website.
"He is capable of doing a little bit of everything; he's going to improve in the future and really give us terrific options in our midfield area."
Saville enjoyed a brief loan spell with Millwall at the back end of the 2012/13 campaign before spending last season on loan at Brentford, where he made 40 appearances in all competitions and scored four goals.
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