Foster, who spent last season on loan at the Hawthorns, has moved to Albion for an undisclosed fee.
The former England international has put pen to paper on an initial three-year contract with a further two-year option in the club's favour.
Foster becomes the first signing for new Albion head coach Steve Clarke.
"Ben's been a priority signing all summer," said Clarke. "His performances last season were exceptional and it was important for the club to strike a permanent deal for him.
"It's a great signing for me and an even better one for the club. I think the supporters will be delighted we've been able to keep him on board - and make him our player.
"In any league in the world you want a goalkeeper that is going to make match-winning saves, turn draws into wins and defeats into draws. A quality goalkeeper is worth 10 or 12 points a season to you and that's certainly what we think we've got in Ben Foster."
Foster's form last season saw him voted Albion's supporters' player of the year and players' player of the year. He kept 10 clean sheets, equalling the club record for the most shut-outs in a Barclays Premier League campaign.
West Brom's sporting and technical Director Dan Ashworth said: "Ben showed to everyone last season how important he is to us, making vital saves at key moments in games.
"He was happy here, enjoyed the goalkeeper coaching under Dean Kiely, the facilities, the supporters, and everything about the club. The fact Ben was with us on loan put us in a prime position to sign him."
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