The 19-year-old former Cork City youngster worked under Town boss and his hero Roy Keane at Sunderland.
Sunderland could be due compensation for Hourihane, who can also play at left-back, as he is under 24 and was offered a new contract.
He told the Ipswich website: "There are a lot of players at Sunderland and when I found out about Ipswich's interest, I felt it was the right move.
"I've known Shane O'Connor for a long while. When I see what he has achieved after being given a chance here, that's what I've got to aim for."
Source: BBC Sport
Source: BBC Sport