The Japan international has joined Saints on a four-year contract.
Sugawara moves to St Mary's after five years with AZ.
Sugawara, who has 13 caps for Japan, said: “To come to Southampton and to play in the Premier League is one of my biggest dreams since I was young, so I am really excited to be here.
“Last summer I played against Southampton in the pre-season. I felt Southampton played very good football with the ball; they didn’t play long balls, only short passing, they played smart.
“I felt Southampton is a really good club. When Southampton gave me an offer, I said yes after one second!”
Saints boss Russell Martin also told the club's website: “Yuki is a player we’ve watched for a long time and was our number one target in his position.
“He arrives at a good age with a lot of games already under his belt at a high level, including a wealth of European experience. He’s a talented footballer with a great mentality, and a character we think will be really popular with his teammates.
“You can sense his enthusiasm and determination to do well – he’s really excited to play for Southampton, not just to play in the Premier League.”