"We're really thrilled to have started our summer recruitment with Nenad Milijas," chief executive Jez Moxey told the club's official website.
"He scored 16 goals from 30-odd games for Red Star Belgrade last season from central midfield and is also a physical presence who can play in a variety of different positions as well as being left-footed which gives the team more balance.
"He's got plenty of experience but also, at 26 years old, is in the prime of his career.
"This is a big signing for us and we are absolutely delighted with it."