The team announced the moved Tuesday, less than a week after it had hosted Thomas on a free-agent visit.
The contract is for one year with a signing bonus of $150K and $1.2 million in base salary, and Thomas has the chance to earn more through incentives and bonuses, a source told ESPN's Field Yates.
Thomas, 31, was acquired by the Texans from the Denver Broncos just before last season's trade deadline. He suffered a season-ending torn Achilles tendon in December and was released by Houston in February.
He caught 23 passes for 275 yards and two touchdowns in seven games after his trade to the Texans. Between the two teams, Thomas finished 2018 with 59 catches for 677 yards and five touchdowns.
The Patriots lost out on one of their top free-agent targets, Adam Humphries, who signed with the Tennessee Titans. They return top option Julian Edelman, 32, who earned Most Valuable Player honors in Super Bowl LIII, and re-signed Phillip Dorsett to a one-year deal that could be worth up to $2.6 million.
Former Washington Redskins receiver Maurice Harris and slot receiver Bruce Ellington were signed to modest one-year deals to help fill out a depth chart that also includes practice-squad player Damoun Patterson and 2018 sixth-round pick Braxton Berrios, who spent his rookie season on injured reserve.
The club could have brought back Chris Hogan, who was an unrestricted free agent, but wasn't aggressive in doing so. Hogan signed a one-year deal with the Carolina Panthers last week that could be worth up to $2 million.
Thomas, a four-time Pro Bowl selection, was due $14 million in 2019, none of which was guaranteed. He said just prior to his Texans release that he wasn't thinking about retiring.
"I can still play, man," he said.
Thomas was arrested Feb. 27 and charged with vehicular assault (a felony), reckless driving and driving without proof of insurance in connection with a crash that occurred Feb. 16 in downtown Denver. He and two passengers were injured and taken to the hospital after his SUV went off the road and flipped end-over-end after hitting a median at more than 70 mph -- more than twice the speed limit.
Thomas pleaded guilty to a misdemeanor charge of careless driving on March 27, and the felony charge was dismissed. He was fined $300, ordered to complete 50 hours of community service and received one year of supervised probation.
A first-round pick in 2010, Thomas spent his first eight-plus NFL seasons with the Broncos, including a stint under former Denver head coach and current Patriots offensive coordinator Josh McDaniels. Thomas has the second-most receiving yards (9,055) and touchdown catches (60) in Broncos history, trailing Rod Smith in both categories.
Thomas will be the fifth receiver in the Tom Brady era (since 2000) to sign with the Patriots after amassing five or more 1,000-yard seasons elsewhere. The list includes Reggie Wayne (8), Randy Moss (7), Chad Ochocinco (7) and Joey Galloway (6).
ESPN's Mike Reiss and Sarah Barshop contributed to this report.