Patricio, who is in Portugal's side for the World Cup in Russia, joined Sporting's youth academy in 2000. He made his senior team debut in 2006 and had been at the club ever since.
He made at least 460 appearances for the Portuguese club in all competitions and has been capped 70 times by his country.
The signing follows Wolves' permanent capture of defender Willy Boly, while Mexican forward Raul Jimenez has joined Nuno Espirito Santo's side on a season-long loan from Benfica.
(Reporting by Anirban Paul in Bengaluru; Editing by Hugh Lawson)