The 24-year-old has penned a two-and-a-half year deal with the Robins and could make his debut in this weekend’s FA Cup clash with Fleetwood Town.
“Bailey has a warrior spirit and represents a good signing for us,” Bristol City boss Lee Johnson told the club’s website.
“He’s 24 and has great Championship experience.
“He’s a tough, Australian international – he’s an old-fashioned stopper.”
Bristol City are currently 18th in the Championship, just three points above the relegation zone.
Wright is seen as the perfect signing to fix their leaky defence as they aim to push up the table in the second half of the season.
Melbourne-born Wright has been at Preston since 2010, making 205 appearances for the Lilywhites and helping in their promotion from League One.
Wright, who scored on his international debut against Saudi Arabia, has been capped 12 times for the Caltex Socceroos and went to the 2014 FIFA World Cup.
He’ll be hoping to play a big part for the Robins over the next couple of months ahead of the Caltex Socceroos March qualifiers against Iraq and UAE.