Vydra spent last season on loan at Watford in the Championship where his 22 goals helped the Hornets reach the play-off final, and his exploits saw him named Championship Player of the Year.
Head coach Steve Clarke told the official club website: “I’m delighted to welcome Matej to the club.
“He had a really good year with Watford and we believe he’s got the qualities to score goals at a higher level. Hopefully, he’ll show that this year with us.
“We had Matej watched throughout last season. As well as some excellent scouting reports, we had some really good feedback from within Watford about Matej as both a player and person."
In total, Vydra has made 58 career league appearances, including 20 as a substitute, scoring 24 goals.