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The highly-rated 18-year-old, considered one of Portugal's hottest prospects, has signed a five-year deal at Molineux in a £35m deal which eclipses the £30m spent for Raul Jimenez in 2019.
Silva becomes Wolves' first summer signing after boss Nuno Espirito Santo called for club chiefs to increase his squad depth following their Europa League exit at the hands of Sevilla in August.
The Portugal U19 international made one league start for Porto's first team last season and scored one goal in 12 Primeira Liga appearances overall.
"Our recruitment team have been watching Fabio since he played for Portugal under-16s and they feel he has always been the best number nine coming through his age group anywhere in Europe," said Wolves executive chairman Jeff Shi.
