Afobe, 25, spent the second half of last season on loan at the Championship winners, scoring six goals in 16 games during their title-winning push.
In what will be his second permanent spell at the club, the former Arsenal man has netted 29 goals in 64 appearances for Wolves since his first arrival in 2015.
Wolves have also agreed to sign French defender Willy Boly on a permanent deal from Porto, in a reported £10m deal after impressing during his season-long loan deal at the club.
His three goals in 36 appearances saw him rewarded with a place in the PFA's Championship team of the season.
Nuno Espírito Santo exciting outfit will compete in the English top-flight in the 2018/19 season after a six-year absence.