Nuno Esperito Santo’s side have paid £35m for Silva, who has signed a five-year contract at the Molineux Stadium.
Silva’s transfer fee gazumps the £30m Wolves paid to sign Raul Jimenez from Benfica permanently last summer.
Silva only broke into the FC Porto senior team last season, scoring one goal in 12 Primeira Liga appearances.
The 18-year-old broke the FC Porto records of youngest debutant, youngest scorer and youngest starter last season.
Silva joins Wolves’ high Portuguese playing contingent, becoming the ninth in total at the club. Joao Moutinho, Pedro Neto, Rui Patricio, Diogo Jota, Daniel Podence, Bruno Jordao, Ruben Neves and Ruben Vinagre are his compatriots.
Executive chairman Jeff Shi told the club’s official website: “We’ve been following Fabio’s development for a long time. He’s a player that you only need several minutes to see his natural football talent. In recent years, Fabio has been developing very fast and now has proven himself in Porto’s first team, which is a top squad.
"Fabio is a young player who shows not only incredible technical ability, but also his game intelligence for a player of his age is top class.
"Fabio has the potential to be a generational talent and for us to see him develop under Nuno is very exciting. He is the type of player our fans will love."
