Ward-Prowse made over 400 appearances for Southampton and captained the club last season when they were relegated from the Premier League after finishing bottom.
"I'm buzzing to be here," Ward-Prowse told West Ham's website.
"It's great to be here and I'm looking forward to getting going."
Ward-Prowse, who has 11 caps for England, spent two decades at Southampton. He joined the south coast club's academy aged eight and made his senior debut at 16 in 2011.
He has scored 17 goals directly from free-kicks in the Premier League, one fewer than his childhood hero - former Manchester United midfielder David Beckham, who holds the record.
"This is a club that has been on the rise for a number of years now," Ward-Prowse said.
"Coming off the success in the Europa Conference League last year, you can feel there is real momentum around this club.
"It's great to be a part of it and I can't wait to play my role in the games to come."
Ward-Prowse is West Ham's second signing of the transfer window following the arrival of fellow midfielder Edson Alvarez from Ajax.
West Ham have also been linked with a move for Manchester United's Harry Maguire, with British media reporting the London club had agreed a deal worth around 30 million pounds for the centre back.
