Werner was absent from Augsburg's pre-season training camp on Tuesday amid reports that he was in talks with Stuttgart over a move. Both clubs confirmed the talks before the deal was confirmed on Wednesday.
The German departs from the Bundesliga to join newly-relegated Stuttgart, who will aim to bounce back into Germany's first division in the coming season.
Werner had been at Augsburg since 2008 but his game time decreased significantly last season and likely played a major role in his departure from the club after eight years.
Long-serving Werner ends spell with Augsburg to drop down a league
Jos Luhukay, who managed Werner at Augsburg for three seasons, reunites with the midfielder at Stuttgart in the 2. Bundesliga.
Werner thrived under Luhukay when given the chances and with Stuttgart desperate to return to the Bundelisga after their shock relegation last season, Werner's experience and ability could prove crucial.
Together at FC Augsburg, Werner and Luhukay helped the club achieve promotion to the Bundesliga for the first time in 2010. They now have the chance to do something similar with their club in the 2016/17 campaign.
Werner's contract with Augsburg was set to expire next summer but his move sees him sign a three-year contract with his new side. He is one of a host of new arrivals at the Mercedes-Benz Arena, joining the likes of Simon Terodde, Jean Zimmer and Jens Grahl at the club.
He'll likely make his debut on Monday night as Stuttgart get their 2. Bundesliga campaign underway against St. Pauli.