Steele was an ever-present for the Championship club last season and has also played for the England Under 21s on several occasions.
The question remains to be seen whether he will be first choice for Sunderland or if will spend most of his time on the bench.
He has been linked with a host of Premier League clubs – including Arsenal and Liverpool – during his short Middlesbrough career.
Sunderland have had a busy summer with Maritmo defender Valetin Roberge, Basel midfielder Cabral and Lazio's Modibo Diakite all joining on July 1.
They have also signed Benjamin Mendy and signed two other youngsters.