An all-state player last season and the second-best prospect in Michigan, Walton averaged 26.1 points, 7.3 rebounds, 7 assists and 7.3 steals last season.
Wolverines' coach John Beilein announced the signing Friday along with those of two other four-star recruits, wing Zak Irvin and power forward Mark Donnal, who signed their letters Wednesday.
"We are excited Mark, Zak and Derrick have joined the Michigan Basketball family," Beilein said in a statement. "These are three young men coming from outstanding families with strong academic backgrounds. They are very talented young men who also value being great teammates. They will fit right in as we continue to build a positive culture within this basketball program."
Michigan's three-member 2013 class is currently ranked eighth in the country by ESPN. The Wolverines were expecting to add three-star recruit Austin Hatch, but after being involved in a 2011 plane crash, Hatch has reclassified for 2014.