The 21 year-old joins on a four-year deal for an undisclosed fee.
Thorne, who played at Wembley in the Play-off final defeat to QPR, appeared 12 times and scored twice for Derby during a successful loan spell last season.
The Englishman was pulled out of Albion's US-bound squad due to advanced talks between the two clubs.
West Brom's technical director Terry Burton indicated the club allowed the transfer to go through after Thorne handed in two requests to move this summer.
Steve McClaren is delighted to have landed the youngster, who was identified as a transfer target as far back as November by the former England manager.
McClaren told the club website: "We're really pleased that George Thorne has joined us on a permanent basis.
"I am sure the fans will be delighted to welcome him back and we're equally pleased that he sees Derby County as the right place for him at this point of his career.
"He was one of the first players I spoke about with our Head of Football Operations Chris Evans when he arrived in November, and we were well aware of his qualities when he joined us on loan in January.
"After being patient in waiting for his chance in the side, he showed what he could do on the pitch. His level of performance was excellent.
"It's taken a lot of hard work for us to get to this stage but I think it says a lot about where we are at as a club that we've been able to bring someone like George in permanently.
"Credit should go to our President & Chief Executive Sam Rush for the time and effort he has put in to get this transfer completed."
Thorne will now join Derby on their pre-season trip to Austria on Sunday.
