"This is one of the best days in my life for me and my family and I'm just happy to be back close to home, my family and my support group," Prater said in a statement.
Prater, a former standout at Proviso West High School, was looking to move closer to his home of Hillside, Illinois.
Northwestern hosted Prater on an official visit this weekend -- his first, and only scheduled visit. He was shown around campus by Pat Fitzgerald, along with other NU coaches and players.
"We're extremely excited for Kyle to be able to come home to Chicago and join our Northwestern football family," Fitzgerald said in a statement. "He is a tremendous young man from a great family and is a product of a high school program we really respect in Proviso West. Kyle's decision to attend Northwestern made sense for everyone involved and we're looking forward to him contributing to our program on and off the field."
Prater battled injuries during his career at USC. He redshirted during his freshman season, and caught one pass for six yards during 2011. However, he left Southern California on positive terms.
"I'd like to thank USC and their administration for my release. I have the utmost respect for USC and the coaching staff, players, fans and everybody I was in touch with there.
Prater will have to sit during the 2012 football season, and will be eligible to play beginning in 2013. However, he will be able to practice with the team this season.
The 6-foot-5 receiver was ranked No. 1 in the state of Illinois in the Scout.com 2010 prospect rankings. He was also a strong student in high school, maintaining a 3.3 grade point average.
Prater is thrilled to be a Wildcat, and closer to home.
"This Northwestern degree will take me far and help me become a better person," said Prater. "The dynamics of the school and the team have shown me a lot and I'm just happy to be a Wildcat."