The 29-year-old defender is Everton's fourth signing of the summer, following the arrivals of centre-back James Tarkowski, former Wolves teammate Ruben Vinagre and forward Dwight McNeil.
Coady will wear the number 30 shirt at Everton and is expected to feature in the first team straight away following the injuries to Ben Godfrey and Yerry Mina in the defeat to Chelsea.
"It's incredible to join Everton," Coady told evertontv. "As soon as I heard the interest, from the manager but also the Football Club itself, I really wanted to be part of it straight away. I'm over the moon to join.
"I've grown up around the city, I know the Football Club, how big this club is and what it means to the supporters. I'm someone who was desperate to come here, to play for this club. I've got family and friends who are massive Evertonians.
"I'm here to give absolutely everything I've got for this football club. It's important I work as hard as I can to help my teammates, help the Club move forward and make people proud."
Manager Frank Lampard added: "We are delighted to bring a player of Conor's quality and vast experience to Everton and he fits into how we want to play as a team.
"As well as being one of the Premier League's most reliable defenders and an England international, his leadership skills will be of huge benefit to us, too."
Director of Football Kevin Thelwell said: "Conor is a top-quality player who I have had the pleasure of knowing for many years. I have no doubt he will be an excellent addition to Everton and our squad.
"Myself and Frank continue to work closely with our Chairman, who has unrivalled experience in player negotiations and we are confident that, together, we will secure the further quality we've targeted between now and the end of the month."