The 20-year-old took 36 wickets for Sussex last season at an average of 27.25, a performance that made an impression with Surrey manager Chris Adams.
"There were two clear objectives in picking our overseas signing for next season. I wanted the player to be of true International class and I wanted them to be able to commit to spending the vast majority of their season with us – Piyush fulfills both requirements handsomely," Adams said in a statement.
"There is a fine spin tradition at Surrey which runs from Jim Laker and Tony Lock to Ian Salisbury, Harbhajan Singh and Saqlain Mushtaq and I hope our latest arrival will one day take his place alongside those names," he added.
In his still nascent international career, Chawla has played two Test Matches and 21 one-dayers, taking 31 wickets.

Chawla made a huge impact during his first stint in English cricket last year, first scoring 102 not out from 86 balls and then taking 6/152 as Sussex beat Worcestershire by 10 wickets.
In his second game, he took impressive match figures of 11/170 against Somerset.
When he returned to county cricket in September, Chawla picked up from where he left off, taking match figures of 9/249 off 87 overs against Yorkshire.
His final matches for Sussex were in the ongoing Champions League Twenty20 against New South Wales and Diamond Eagles.
Chawla will join Surrey at the conclusion of the Indian Premier League next season where he represents the Kings XI Punjab and has 29 wickets at an average of 24.03.
Surrey managing Director Gus Mackay said, "After the problems we have suffered in the past I am very pleased we can announce the signing of a world-class overseas player so early in our pre-season schedule. The knowledge of this signing will bring a solidity to our preparations that can only be highly beneficial." PTI PM PM 10220934