The 26-year-old central defender joined the Potters in January and went on to make 14 appearances as Mark Hughes' side secured a second successive top 10 Premier League finish.
The Club have exercised their right to pay an undisclosed fee for Wollscheid who agreed an initial three-year contract which will take effect from July 1.
City Chief Executive Tony Scholes said: "We're delighted to have secured Philipp's services on a permanent basis. He joined us midway through the season but wasted little time in making a big impression.
"Within days of arriving in England he made his debut against Arsenal at the Emirates Stadium and went on to become an important member of Mark's squad.
"He's clearly enjoying life in England; he feels very settled here and had no hesitation in committing his long-term future to Stoke City."
Wollscheid made 12 Premier League appearances for the Potters and also played twice in the FA Cup.