Walder, who has won four Test caps since making his international debut in 2001 and is a regular for the England Saxons, was released by Newcastle at the end of last season after seven years at Kingston Park.
Walder fielded interest from a number of clubs, including the Newport Gwent Dragons and Cardiff Blues, but remaining in the Premiership was always his priority.
"I am really excited about my move to Wasps. It's a fresh start for me and I am looking forward to the new challenges that lie ahead," said Walder.
"Wasps' set-up, in terms of conditioning and development of players, is second to none, and with their help I think I can improve as a player."
Walder will provide Wasps with added quality at fly-half, where he will compete with Alex King and Jeremy Staunton for the number 10 jersey.
"Dave is an important addition to the squad, giving us experience and depth in the number 10 position and as a reliable goal kicker," said Wasps director of rugby Ian McGeechan.
"He is a talented player and a long-term acquisition for us, so we want to spend a bit of time developing the undoubted potential that he has."
Wasps have also agreed a new two-year contract with lock Simon Shaw, who will embark on his 10th season and a testimonial year at the club in September.
Wasps forwards coach Craig Dowd said: "Shawsy has been a very important part of the Wasps pack for a number of years now. When Simon Shaw doesn't play, our driving game is not as good and he is devastating when carrying the ball.
"Everyone at Wasps is very happy that Shawsy is staying with us. He is a quiet man but also a leader, able to draw on years of experience, and hopefully he will see his days out with us here before we finally put him out to pasture!"