The former Bristol City and Oldham centre-back, 28, is Walsall's fifth summer signing, joining Luke Leahy, Jon Guthrie, Mark Gillespie and Nicky Devlin at the League One club.
"I'm really looking forward to it," Wilson told Walsall's website.
"I want to get some games in and this definitely seems like a great place to do that."
Wilson, the fourth defender to move to the Banks's Stadium this summer, joined Sheffield United from Oldham a year ago.
He made seven league appearances for the Blades last season as they won promotion to the Championship.
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Walsall have signed defender James Wilson on a season-long loan from Sheffield United.