Oztumer has enjoyed an excellent spell with the Saddlers, with 32 goals coming from 95 outings in all competitions, but the player's form meant that interest from bigger clubs this summer was inevitable.
The playmaker had admirers in the Championship and from abroad but the 26-year-old has decided to link up with Bolton on a free transfer.
Manager Phil Parkinson told the club's official website: "We're really pleased with the signing of Erhun. He has been one of the most productive players in League One over the past few seasons for a team in and around the bottom half of the table.
"We're very much looking forward to working with him over the next couple of years."
Bolton only remained at the second tier of English football with a last-day victory over Nottingham Forest.