Dobbin, 23, scored 10 Championship goals on loan at Preston North End last season and netted in both games against Saints during the campaign.
The right-footed ace also laid on eight assists for his teammates, with only Finn Azaz bettering his tally for combined goals and assists in the Saints squad.
Dobbin is a versatile attacker who played primarily as a second striker for Preston but has also been deployed on the wing and up front in his career.
He adds pace and quality to head coach Tonda Eckert's squad, as well as Championship knowledge after previous loan spells at West Brom and Norwich.
Upon signing for Saints, Dobbin said: “It’s an amazing feeling, I’m very grateful to be able to represent this club and to be given the opportunity to play for Southampton is something that I can’t ever take for granted. I’m just really thankful to be here and I can’t wait to get started.
“It’s been a busy few weeks, but Tonda was the first manager I spoke to and the way he spoke about the football club, the way he spoke about the players, it sold it to me straightaway. My mind was already made up as soon as I knew Southampton were interested.”
Dobbin becomes the club's fourth signing of the summer, following the permanent acquisitions of loanees Daniel Peretz, Cyle Larin and George Long.
Technical director Johannes Spors added: “We are really pleased that Lewis has chosen to join us ahead of other clubs, underlining his desire to be a Southampton player from the first moment we declared our interest in him.
“He is already, at a young age, a proven player in the Championship who is always a threat to defences with his speed and ability to stretch teams.
“His versatility gives us greater flexibility in our forward line. We look forward to seeing him thrive with us not only next season, but in the years ahead.”