The 24-year-old has signed a three-year deal after heading for Wearside on Wednesday to hold talks.
His arrival caps a good two days for the Black Cats, who earlier on Thursday pushed through their move for South Korea striker Ji Dong-won after landing England Under-21 forward Connor Wickham from Ipswich on Wednesday.
The Solihull-born 24-year-old enjoyed a fine season in 2010/11 picking up a Carling Cup winners' medal and scoring eight goals in 29 Barclays Premier League appearances.
He finished as the club's leading marksman but was unable to save the Blues from dropping ino the Championship.
Gardner the official club website: "It's unbelievable, to be honest. As soon as I found out Sunderland were interested, it was a no-brainer.
"Obviously, I have heard so much about Steve Bruce and his backroom staff and how good a chairman Niall Quinn is.
"It's such a massive club and their ambitions for this season meet my ambitions, and it was too good to turn down."
He said: "It means that the club wants to go places. Obviously, we want to finish as high up the table as we can - we want to be in Europe next year and it's a great task to go and chase.
"It's a good goal for us and we can go and do it, and I am sure we will."
Gardner began his career with Aston Villa but Birmingham paid their Midlands rivals £3m to sign the lifelong Blues fan in January 2010.
He made a total of 42 Barclays Premier League appearances for Birmingham before opting for the switch to Sunderland in the wake of relegation.
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