The midfielder was released by Fulham at the end of the 2013-14 campaign after the Craven Cottage outfit were consigned to relegation to the Championship.
Sidwell started 36 of Fulham’s 38 Premier League fixtures last season and was the club’s top scorer with eight goals in all competitions.
The former Reading, Chelsea and Aston Villa man will officially join Stoke on July 1 when his contract at Fulham runs out.
The 31-year-old becomes Stoke’s second signing of the close-season following the arrival of Phil Bardsley from Sunderland last month.
“Steve was much in demand following his release by Fulham and we are delighted to have won the race to secure his signature,” chief executive Tony Scholes told the club’s official website.
“Mark Hughes signed him for Fulham and from talking to Steve I know how much he’s looking forward to working with him again.
“Like Phil Bardsley, Steve brings great experience to our squad and I’m sure he will prove to be an excellent addition to our squad.”
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