The 21-year-old came through the youth ranks of the Rossoneri and broke into the AC Milan first team in the 2017/2018 season, scoring 10 goals in 28 Serie A appearances.
But Cutrone’s involvement in the first team dwindled last season, scoring just three Serie A goals as most of his 34 league appearances came from the bench.
In a statement on their own website, Milan said: "The club wishes to say a special thank you to Patrick for his passion and commitment during his 12 years with the Rossoneri. A big 'good luck' to Patrick for his new professional adventure in the English Premier League."
Wolverhampton Wanderers are in need of additional firepower in their attacking armory as they compete in the Europa League, and Cutrone’s signing will augment the efforts of Raul Jimenez and Diego Jota upfront.
"I'm very pleased to be here because the club really wanted me. I'm very happy and want to give my all for the team," Cutrone said in a statement.
"The club really wanted me and being able to play in the Premier League for Wolves is fantastic. I just can't wait to get started.
"I've come here to play football. I'll have to settle in initially and I'm looking forward to heading out on to the pitch to play.
"You never stop learning and I'm here to learn new things, but I'll certainly give my all for the team."
Cutrone is Nuno Esperito Santo’s second summer signing after the loan capture of defender Jesus Vallejo from Real Madrid last week.
