The American goalkeeper joins the Blues from Premiership leaders Manchester United for around £3 million.
Howard told evertonTV: “The club share my ambition, that is for sure, the manager does and so do the fans.
“I was drawn to the club for a number of reasons and the players in the dressing room are one of them.”
Everton boss David Moyes said: “We are delighted to have signed Tim on a permanent basis. He has come in this season and proved he is a good keeper and we are pleased to have secured him.”