The Brazil midfielder put pen to paper on a deal ahead of last night's victory over West Ham.
Wolves boss Vitor Pereira said: "I'm very happy because Joao is a team player. He gives every time 100%, in training, in the games, and he has the quality to help this team and this club to make the next step.
"At the end of the game he's given everything for the team, defending, attacking, supporting the team-mates, and this is what we need in our team, this is the spirit we need at this club.
"We must come to Wolverhampton with this hunger, this spirit to help the team, help the club to grow up.
"He's very important because he's a midfielder with physicality and the power to run for 90 minutes, and he's young. He has big potential and can be a top player."