The 23-year-old has struggled for first-team football under Diego Simeone and is now set to spend two seasons with the Bundesliga outfit
France international Guilavogui becomes the Bundesliga outfit's fourth acquisition of the transfer window.
The 23-year-old follows midfielders Aaron Hunt and Mateusz Klich and right-back Sebastian Jung to the Volkswagen Arena as Wolfsburg aim to build on last season's finish of fifth with strong performances in the Bundesliga and Europa League.
Signed from Saint-Etienne in September last year, Guilavogui has been unable to break into the first team with Spanish champions Atleti.
Guilavogui made only seven appearances in all competitions before being loaned back to Saint-Etienne in January, helping Christophe Galtier's men to a top-four finish in Ligue 1.
But Wolfsburg are confident that Guilavogui, who has five France caps to his name and was linked with Arsenal prior to his move last summer, will be able to improve Dieter Hecking's side.
General manager Klaus Allofs told the club's official website: "We are very pleased to strengthen our squad with a young player with great potential.
"Josuha Guilavogui already has international experience and will play his part in helping the team move forward in their development."
Hecking added: "He is a midfielder who can be used in the defensive area. I'm sure that Josuha Guilavogui will fit in quickly and help the team."