The 22-year-old right-back has made 93 appearances for Wolves since his debut in December 2014, having come through the youth system at Molineux.
Iorfa was also in Aidy Boothroyd's England squad at the recent European Under-21 Championships.
He moves to Portman Road following the departure of full-back Josh Emmanuel on loan to Rotherham.
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Ipswich Town have signed defender Dominic Iorfa from Championship rivals Wolves on a season-long loan deal.