West Park will be the start and finish point for one of cycling's toughest events, a straight race against the clock for individual cyclists and a real test of strength and endurance.
The event will see more than 90 cyclists competing in the men's and women's competitions and will be free for people to to line the streets to watch the action.
Birmingham 2022 CEO Ian Reid said Wolverhampton was the "perfect" setting for the time trial.
He said: "We wanted to make sure that the games were spread right across the region and it was really important to bring more of the games into the Black Country.
"Wolverhampton is a perfect host as West Park has an incredible amount of space and there's a hugely fanatical support for cycling in the city."
Wolverhampton has strong links to road cycling, with the first mass start cycling road race being held there in 1942 and leading riders such as Hugh Porter and Percy Stallard coming from the city.
Another rider from Wolverhampton is former European Champion Andy Tennant, who was at the launch event.
He said: "It's fantastic news as Wolverhampton has hosted some big events I've taken part in, such as the Tour of Britain.
"I went to London 2012 and Glasgow 2014 and I saw the impact it had on everyone, with all those involved loving it, so I really hope everyone comes out and supports it.
"I'm a proud Wulfrunian and I'm very proud to see it here, so I hope it will be a great event."
Cycling has seen a massive upsurge in interest during the pandemic and for Robin Kyte, president of Wolverhampton Wheelers cycling club, the announcement can help more people take up cycling.
He said: "I'm really pleased to see the time trial taking part here as it can help to inspire people to get on their bikes to enjoy themselves and keep fit.
"It's a healthy lifestyle and something you can do all year round and I think it's a great honour to have people in the city see the world's best cyclists in action."
Wolverhampton Council leader Ian Brookfield was one of the leads in the process to get the time trial at the games and spoke about how it would benefit the city.
He said: "We're going to have hundreds of millions of people who will tune in and see the delights of Wolverhampton, such as West Park.
"It's going to put the city's name out there across the whole commonwealth, which is a large part of the world, and that can lead to more vistors and greater investment.
"We're just over the moon to be able to announce that Wolverhampton will be home of the Commonwealth Games time trial cycling events."
Cannock Chase has already been announced as the base for mountain biking events during the Games.