Jonsson, 23, has signed for an undisclosed fee after passing a medical ahead of Tuesday night's Barclays Premier League clash with Norwich at Molineux. He started his career in Iceland with second division side KF Fjardabyggdar before joining Hearts in the summer of 2006.
Jonsson, who can play at full-back, centre-back and in midfield, was voted player of the year by Hearts supporters for the 2009-2010 campaign and made more than 150 appearances for the club.
Jonsson, who joins former Hearts defender Christophe Berra at Molineux, has won 12 full caps for Iceland and also represented his country at Under-17, Under-19 and Under-21 levels.
Wolves boss Mick McCarthy said: "We've been watching Eggert for a long time and he has impressed our scouts up there. He's a versatile midfield player who can play in a number of positions comfortably and will be a good addition to the squad.
"He's a good player now but he's also one of those at an age where he has got more improvement in him and should get better and better. Playing alongside better players in a better league will only help him in that respect."