The forward has scored four goals so far, since signing on-loan from RB Leipzig in the summer, but last featured on December 15 after suffering a hamstring injury.
Wolves held a £12million option on the South Korean at the end of his season-long loan, but have now decided to make it permanent early.
However, the club will not exchange funds with Leipzig until July, with Wolves simply informing the German side that they will take up the option on him.
The price and personal terms on a pre-contract with the player had already been agreed in the summer when he joined on-loan, meaning the process to sign him permanently this month was a straightforward process.
Head coach Bruno Lage is a huge fan of Hwang and by confirming his permanent signing early the club have been able to give him stability as he plans for his new life in England. Wolves hope this will allow him to settle properly with his future secured.
Hwang is technically still on-loan, so his signing will not free up a loan spot for Wolves. The club also have Francisco Trincao temporarily from Barcelona.