The 20-year-old Portugal Under-23 international joined Los Rojiblancos from Pacos Ferreira in 2016 but was immediately loaned to Primeira Liga side Porto where he played under new Wolves boss Nuno Espirito Santo.
He played a total of 38 games last term, scoring nine goals and creating a further seven more.
Speaking to the club’s official website, Jota revealed his delight at joining the Championship side.
He said: “I am very excited. Wolves is a huge club and an historic club.
“It is always a goal for me to play in England and this is a good opportunity for me.
“It is good for me to work with Nuno again because I know him and worked with him last year.
“I have also worked with some of the other players here as well.
“That will help me settle in here.
“It is always better when there are people that you know when you are moving to something different – a different country with a different language.
“Playing in the Championship will be very hard and very competitive with a lot of games.
“It will be a good experience for me.
“I will always do my best for the fans – I will do a lot of running for sure and hopefully will score goals and provide assists.”