The 31-year-old has agreed an 18-month deal at the Stadium of Light after leaving Stoke City.
Sunderland boss Lee Johnson said Batth had multiple offers from Championship and League One clubs.
"I don’t think it was the highest financial offer for him which I think shows the quality of the man,” said Johnson.
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Batth previously played for Wednesday, where he made over 50 appearances during two loan spells, and helped the club win promotion from League One in 2012.
The defender could make his Sunderland debut when they host Portsmouth at the Stadium of Light.
Wednesday complete Storey deal
While they missed out on Batth, Wednesday have completed the loan signing of Jordan Storey from Preston.
Reports had suggested that Sunderland and Ipswich were also interested in the 24-year-old.
Storey signed a new contract at Preston last September but had seen his game time reduced at Deepdale in recent weeks
Doncaster boss reacts to Younger move
Another deal which has been completed is Oliver Younger’s permanent transfer from Sunderland to Doncaster.
Rovers boss Gary McSheffrey said: "It was really important that we got a defender in, and when Ollie’s name was put to us we saw it as a good opportunity for the club.
“He’s got really good pedigree, he’s young and hungry which is the type of player we want here.
“He will be a good asset for the club and we feel he can be important for us in the short and long term.”