Tottenham Hotspur academy graduate Walker-Peters made over 200 appearances for Southampton, 33 of which came in the Premier League last season when the south-coast club suffered the earliest-ever relegation in the competition's history.
The 28-year-old also has two England caps, earning both of those in 2022.
"It feels like it has been a long-time coming - I’ve been linked with a move to the club in the past - and I’m just happy to be here now," Walker-Peters said in a statement.
"I spoke to (coach) Graham Potter and he was a big, big part of me making the decision. I've always liked his style as a coach, and I think it will suit me well."
West Ham, who finished in 14th place last season, begin their 2025-26 Premier League campaign on August 16 with a trip to Sunderland.