Born in Wordsley, the 22-year-old is a product of the Warriors' academy and moves north to link up with the club's defence coach, Billy McGinty, who joined last summer after six years at Sixways.
"Mike is a talented young player and is very excited about the opportunity to play for Edinburgh Rugby," said head coach Michael Bradley.
"He's an ambitious young man and arrives knowing that he has to work hard and have a big year to secure a longer term.
"That kind of pressure can bring the best out of players, particularly when competition for places in our back three is increasingly fierce."
Penn added: "My first thoughts when I arrived were centred around the training facilities and the quality of the coaching staff, particularly their ideas and ambitions to take the club forward.
"Edinburgh Rugby have been one of Europe's top sides this season so I'm really looking forward to getting in there, working hard as part of a quality squad and proving myself.
"I couldn't ask for much more really. The type of rugby they play really suits me, that's my type of game.
"I like to play the ball and avoid contact using my pace, I can't wait to show it on the big pitch at Murrayfield."