John Lundstram has agreed a two-year contract with Oxford United.
The 21-year-old, who has represented England at youth level, had been a free agent since his departure from Everton at the end of last season.
"It's a big move for me because it's my first permanent transfer rather than a loan and I wanted to make sure that I joined the right club, one that has ambition and is looking to win things," he told the club's official website.
U's manager Michael Appleton added: "John is a player who a lot of clubs have been monitoring. Everton offered him a new deal but he felt it was the right time to make a permanent move and establish himself at another club and we are delighted that he came to Oxford."
Lundstram never made a senior appearance for Everton, who loaned the midfielder out to five clubs, including Doncaster Rovers and Blackpool.
