The Chile international is the club's sixth signing of the summer and will wear the No.24 shirt at Loftus Road and says Mauricio Isla was a big factor in his decision to move to west London.
"I have come here to do as much as I can for QPR in the Premier League," he told the club's official website.
“I’ve spoken to Mauricio a lot and he said it’s a great, relaxed environment to work in, with a fantastic squad of players.
“The Premier League is the best in the world, the most exciting in the world, and I am looking forward to competing in what is a super-competitive division.”
Manager Harry Redknapp, meanwhile, says he was impressed by Vargas at the World Cup and says his versatility is a big asset.
"Eduardo is a quality player. He’s sharp, he’s bright, and he’s very lively on and off the ball," he added.
“He can play as a No.9, he can play in behind, he can play wide – he’s very versatile.
“I really liked the look of him during the World Cup and he’s a player our scouts have been looking at for some time.
“He’s been on our radar for a long time now and we've had reports on him, from our scout over there, for a while.
“We’ve had him watched a lot, over the last year or so, and the feedback has been very positive.
“I’m delighted we’ve been able to bring him in.”