Larsson has signed a three-year contract and joins the club on a free transfer as his contract at Birmingham expired at the end of last month.
Sunderland boss Steve Bruce said: “Seb was a fantastic young player for me at Birmingham and he has matured into a very good midfielder.
“He has been courted by a number of top clubs over the summer – both in England and across Europe – so we are naturally delighted that he has chosen to come to Sunderland.”
Sunderland have also confirmed the signing of goalkeeper Westwood on a three-year deal.
Westwood joins the Black Cats on a Bosman free transfer from Coventry.
