Vinagre, 18, was part of the Portugal Under-17 squad which beat Spain to win the European Championships last summer.
The former Sporting left-back, who is yet to make a senior appearance for Monaco, will be involved with Wolves' first-team and Under-23 squads.
"I like English football and the Championship and this is the perfect chance for me to get some experience," Vinagre told the club website.
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Wolves have signed Monaco defender Ruben Vinagre on a season-long loan.