"Graham's an experienced keeper who I had no hesitation in taking," the Wolves boss told the club's official website.
"He lost his slot at Reading through injury but he doesn't want to just sit there and pick up his money.
"He wants a chance and he's going to come here and compete for a place in the team and I like that.
"He'll be on the bench on Saturday."
Stack, who spent time on loan at Leeds last season, is looking to make the most of his loan move.
"Wolves is a fantastic club with loads of potential and this is a big season for them," he said.
"I realise that I will have to be patient but this is a chance for me to challenge for a place.
"Mick is a very well respected manager. He was in charge of the Irish squad while I was in the Under 21s and I'm looking forward to working with him."