A 26-year-old center back, Wilson joins former Ipswich Town defender Tommy Smith in headlining an overhauled Rapids defense entering the 2018 season.
"Danny's signing is an important addition to our back line," Rapids general manager Padraig Smith said in a news release. "In addition to his experience and leadership, Danny is in the prime of his career, and will be one of the best passing center backs in the league."
Wilson had appeared in 14 league matches for Rangers this season, scoring three goals. The Scotland international, who has made 109 appearances in all competitions over two stints with Rangers, also has played for Liverpool, Blackpool, Bristol City and Hearts of Midlothian.
He joins a Colorado side that went 9-19-6 last season to finish 10th out of 11 teams in the Western Conference.
"First and foremost, I would like to thank Rangers, as well as their supporters, for the terrific support they showed during my time with the club," Wilson said. "But in my discussions with [the Colorado front office] it became clear that the Rapids have a very ambitious vision for the future, and I can't wait to join the team and start the process of bringing that vision to life."