Jackson started 14 games for the team last season as they finished 7-9 but the Seahawks made it clear they would adopt a new offensive strategy when they acquired free agent Matt Flynn in March and drafted Wilson during the off-season.
The Bills will send Seattle an undisclosed draft pick as part of the deal.
"Because of our situation and the opportunity with the guys that we have, he (Jackson) deserves a chance to be playing," Seahawks coach Pete Carroll told reporters.
"Buffalo came after him and I hope it's a good thing for him."
Seizing his opportunity, Wilson has emerged as the Seahawks' top signal-caller and will start the regular season opener against the Arizona Cardinals in Glendale on Sept. 9.
A dynamic runner and passer, Wilson was given the start in Seattle's 44-14 pre-season game win over Kansas City on Friday - with Flynn sitting out due to a sore elbow - throwing for 185 yards and two touchdowns.
"It's been a very exciting competition that's gone on, and Russell has taken full advantage of his opportunities and done everything we could ask for on the field," Carroll said.
"What he's done off the field in meeting rooms and with our players and how he's represented himself, he's earned this job."
Earlier on Sunday, the Seahawks cut wide receiver Terrell Owens, ending his NFL comeback before it had officially began.
The 38-year-old had earned a one-year contract with the Seahawks after working out with the team earlier this month, setting up a return to the league for the first time since 2010, but he failed to impress during pre-season action, making just two catches in two games.
Having sat out last season with a knee injury and despite a lack of interest from teams around the league, Owens however remained optimistic he would be picked up by another team.
"I'm no longer a Seahawk. I THANK the organization 4 the opportunity, I'm truly blessed beyond belief," Owens tweeted on Sunday. "My FAITH is intact & will NOT waiver."
During a 15-year career, Owens ranks second in receiving yards (15,934) and touchdown catches (153), but often clashed with team mates at stints with five other NFL teams.