Wolfsburg, who secured a Champions League group stage spot with two matches to spare earlier on Sunday, said the 27-year-old Germany international would add versatility and quality to their attack.
Kruse, who has also played for Werder Bremen, Freiburg and St Pauli, has scored 11 times in the league this season, helping Gladbach close in on a top-three finish and their first appearance in the champions League group stage.
"I am happy to take the next step of my career at Wolfsburg," Kruse said in a club statement. "The playing style fits me and the squad is brimming with quality.
"I will now focus on my matches with Gladbach and then contribute after the summer break towards a successful future for VfL Wolfsburg," he said. (Reporting by Karolos Grohmann; editing by Toby Davis)