Walker-Peters started his career at Tottenham and moved to Southampton on loan in January 2020 before making the switch permanent that summer.
He made 202 appearances for Southampton but, after they were relegated from the Premier League last season, left following the expiry of his contract.
Walker-Peters was on the verge of joining Ole Gunnar Solskjaer’s Besiktas, but the Turkish club said on Thursday they were no longer interested after Walker-Peters delayed his medical following interest from West Ham.
“I spoke to Graham Potter and he was a big, big part of me making the decision,” said Walker-Peters.
“I’ve always liked his style as a coach, and I think it will suit me well.
“Every team wants to win trophies and West Ham have that ambition. From speaking to Graham, he wants to create something special, and hopefully I can be a part of that.”
This summer West Ham have signed Senegal defender El Hadji Malick Diouf for £19m from Slavia Prague and made defender Jean-Clair Todibo’s loan move from Nice permanent.
They have sold winger Mohammed Kudus to Tottenham for £55m.