The 20-year-old striker has signed a three-year contract at the John Smith’s Stadium with the club having an option to extend the deal by a further 12 months.
Manchester-born Hiwula joined the Blues at the age of 12 but did not make a senior appearance.
He spent a month on loan at Yeovil last season, scoring once in nine appearances before joining Walsall on a similar arrangement in February. He netted nine times in 17 starts for the Saddlers.
Town manager Chris Powell, who may give Hiwula his bow in Marbella against Leyton Orient in a friendly this morning, said: “It is clear from my discussions with Jordy over the last few days that he is a driven young man with an ambition to be a success in his career.
“We know he has a lot of ability and potential as well and this club will give him the platform and opportunity to develop and improve.
“He can see that from the similar path that two of his new team-mates have taken in Tommy Smith and Harry Bunn. The track record of this club is clear to see and that helps us attract players here. Few other clubs have that.
“Having different attacking options and a big goal-scoring threat is vital to any team that aims to be successful in the Championship and Jordy adds to the three strikers we have in Nahki Wells, James Vaughan and Ishmael Miller.
“Added to that, he showed at Walsall that he is equally as capable playing in a wide position, which we employed to good effect last season.”
Defender Tomas Kalas has secured a season-long loan move to Middlesbrough from Chelsea.
The 22-year-old Czech Republic international spent the second half of last season at the Riverside Stadium.