The Northern Ireland international, who helped Hibs win the CIS Cup last season, moves for an undisclosed fee believed to be about £500,000.
"This is a big step up for me and I need to build myself a new reputation," the 26-year-old told the club website.
Sproule has signed a three-year contract at Ashton Gate.
Last year, Sproule turned down a move to Ukranian club Dnipro, but said he was ready for a new challenge.
 | It is an exciting time for Bristol City, they are a club on the up which is good for me and my international ambitions Ivan Sproule |
"It is a good league up in Scotland but it is an even stronger one, in my opinion, down here," said Sproule.
"There are some good players at this club already and I am going to have to work hard and fight for my place.
"I have nothing but good words for Hibs as a club - and all the players, staff and supporters - they were great to me."
Sproule said he believed he would become a better player under City manager Gary Johnson.
"Gary was a big factor and as a club they made it clear they were determined to get me," said Sproule.
"It is an exciting time for Bristol City, they are a club on the up which is good for me and my international ambitions."
Sproule made 94 appearances, scoring 18 goals, since joining Hibs from Institute in 2005.
BBC