"To come to such a great club that's been on an upward curve over the last few seasons, I'm really excited and over the moon. I'm looking forward to getting started," Steele told Brighton's website.
"I'm not silly enough to come in and think I'm going to be the number one... Ultimately, I want to work really hard and get myself in contention. I'll try my best to do that."
Steele previously played for Middlesbrough and Blackburn Rovers and has also made seven appearances for the England under-21 side.
(Reporting by Aditi Prakash in Bengaluru; editing by Amlan Chakraborty)
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