Wood has made seven Premier League appearances for Leicester in 2014-15, all of which came as a substitute.
He found the net once in that time, in a 2-2 home draw with Everton back in August, but has now joined an Ipswich side challenging for promotion from the Championship.
"I finished training at Leicester yesterday and I was told of Ipswich's interest then," he told Ipswich Player.
"Straightaway I was on the phone, speaking to the gaffer and had a really good chat about coming to Ipswich and I was really excited about joining the club.
"It's well documented that I'm friends with Tommy Smith and I'm always in contact with him. I spoke to him about everything concerned with the club and everything he said was positive.
"Once I'd spoken to the gaffer and Tommy, I'd made my mind up straightaway about coming here."
Wood could make his debut in Sunday's East Anglian derby against local rivals - and fellow promotion contenders - Norwich City at Carrow Road.
