Kilman, 27, said: “It’s an amazing feeling to be a West Ham United player.
“As soon as I was aware of the interest from the club, it was an opportunity I was keen to pursue, so I couldn’t be more delighted to be here.
“I really enjoyed working with Julen during his time at Wolves. He’s a top-class coach and someone I learned a lot from, and I am confident I will continue to improve as a player under his management here.”
Kilman made 151 appearances for Wolves, scoring three goals, since making his debut in May 2019.
He joins goalkeeper Wes Foderingham and Brazilian winger Luis Guilherme as summer signings at London Stadium.
Wolves sporting director Matt Hobbs, who signed Kilman in his previous position as chief scout, said his departure was a “bittersweet moment” but a “deal that worked for everybody”.
Hobbs said: “He’s someone you can’t help but root for. I don’t know anyone at the club who would have a negative word about him.
“Maybe people will realise what he did on the pitch more now he’s left than when he was here.”
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