The move ends a three-and-a-half-year stay at Molineux for the 33-year-old, who leaves having started Wolves' opening two matches of the season, a Carabao Cup clean sheet against Port Vale and 90 minutes in a 2-2 Championship draw with Blackburn.
That run of games came despite Bentley making only three appearances all of last season, when Rob Edwards' Wolves finished bottom of the Premier League and were relegated to the Championship.
Bentley arrives at the CBS Arena as Frank Lampard's side prepare for their own return to the top flight, and the goalkeeper was quick to praise the project he is joining.
"Coventry City is a fantastic club and I'm really happy to get this deal over the line," Bentley said. "It feels like a place that is developing and, off the back of a fantastic season last year, there is a really good feel around the place.
"It is really positive and there is an obvious excitement to go into the new season with the aim of being as successful as possible."
The goalkeeper, who has previously played for Southend, Brentford and Bristol City, framed his role at Coventry around leadership as much as playing time.
"I will bring a lot of experience. I'm a senior player with good leadership qualities and I'm someone who has really high standards.
"I want to make my mark on the pitch as well, of course. There is a really good goalkeeping group here. When I get my opportunity, it is down to me to take it. I want to help the club get results in the Premier League."